UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2012~~2013


¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-15759

CLECO CORPORATION

(Exact name of registrant as specified in its charter)



Louisiana (State or other jurisdiction of incorporation or organization)	72-1445282 (I.R.S. Employer Identification No.)

2030 Donahue Ferry Road, Pineville, Louisiana (Address of principal executive offices)	71360-5226 (Zip Code)

Registrant’s telephone number, including area code: (318) 484-7400

Commission file number 1-05663

CLECO POWER LLC

(Exact name of registrant as specified in its charter)



Louisiana (State or other jurisdiction of incorporation or organization)	72-0244480 (I.R.S. Employer Identification No.)

2030 Donahue Ferry Road, Pineville, Louisiana (Address of principal executive offices)	71360-5226 (Zip Code)

Registrant’s telephone number, including area code: (318) 484-7400

Indicate by check mark whether the Registrants: (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrants were required to file such reports) and (2) have been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the Registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrants were required to submit and post such files). Yes x No o

Indicate by check mark whether Cleco Corporation is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer x Accelerated filer o Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether Cleco Power LLC is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer x (Do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether the Registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act) Yes o No x

Number of shares outstanding of each of Cleco Corporation’s classes of Common Stock, as of the latest practicable date.

Registrant	Description of Class	Shares Outstanding at ~~October~~April 2625, ~~2012~~2013
Cleco Corporation	Common Stock, $1.00 Par Value	60,~~726~~444,~~390~~140

Cleco Power LLC, a wholly owned subsidiary of Cleco Corporation, meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format.

CLECO CORPORATION CLECO POWER ~~2012~~2013 ~~3RD~~1ST QUARTER FORM 10-Q

This Combined Quarterly Report on Form 10-Q is separately filed by Cleco Corporation and Cleco Power. Information in this filing relating to Cleco Power is filed by Cleco Corporation and separately by Cleco Power on its own behalf. Cleco Power makes no representation as to information relating to Cleco Corporation (except as it may relate to Cleco Power) or any other affiliate or subsidiary of Cleco Corporation.

This report should be read in its entirety as it pertains to each respective Registrant. The Notes to the Unaudited Condensed Consolidated Financial Statements are combined.

TABLE OF CONTENTS



TABLE OF CONTENTS
		PAGE
GLOSSARY OF TERMS		3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		5

PART I	Financial Information
ITEM 1.	Cleco Corporation — Condensed Consolidated Financial Statements	7
	Cleco Power — Condensed Consolidated Financial Statements	14
	Notes to the Unaudited Condensed Consolidated Financial Statements	20
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	47
ITEM 4.	Controls and Procedures	49

PART II	Other Information
ITEM 1.	Legal Proceedings	50
ITEM 1A.	Risk Factors	50
ITEM 4.	Mine Safety Disclosures	50
ITEM 5.	Other Information	51
ITEM 6.	Exhibits	52
	Signatures	53

		PAGE
GLOSSARY OF TERMS		3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		5
PART I	Financial Information
ITEM 1.	Cleco Corporation — Condensed Consolidated Financial Statements	7
	Cleco Power — Condensed Consolidated Financial Statements	16
	Notes to the Unaudited Condensed Consolidated Financial Statements	24
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	59
ITEM 4.	Controls and Procedures	60
PART II	Other Information
ITEM 1.	Legal Proceedings	61
ITEM 1A.	Risk Factors	61
ITEM 4.	Mine Safety Disclosures	61
ITEM 5.	Other Information	61
ITEM 6.	Exhibits	62
	Signatures	63

CLECO CORPORATION CLECO POWER ~~2012~~2013 ~~3RD~~1ST QUARTER FORM 10-Q

GLOSSARY OF TERMS

References in this filing to “Cleco”, including all items in Parts I and II, ~~to “Cleco”~~ mean Cleco Corporation and its subsidiaries, including Cleco Power, and references to “Cleco Power” mean Cleco Power LLC and its subsidiaries, unless the context clearly indicates otherwise. Additional abbreviations or acronyms used in this filing, including all items in Parts I and II are defined below.

ABBREVIATION OR ACRONYM	DEFINITION
401(k) Plan	Cleco Power 401(k) Savings and Investment Plan
ABR	Alternate Base Rate which is the greater of the prime rate, the federal funds effective rate plus 0.50%, or the LIBOR plus 1.0%
Acadia	Acadia Power Partners, LLC, a wholly owned subsidiary of APH. Acadia no longer owns any materials and supply inventory, property, plant, and equipment, or land as a result of the disposition of Acadia Unit 2 to Entergy Louisiana on April 29, 2011. From February 23, 2010 to April 29, 2011, Acadia was owned 100% by Cajun and consisted of Acadia Unit 2. Prior to February 23, 2010, Acadia was 50% owned by APH and 50% owned by Cajun and consisted of Acadia Unit 1 and Acadia Unit 2.
Acadia Unit 1	Cleco Power’s 580-MW unit, combined cycle, natural gas-fired power plant located at the Acadia Power Station near Eunice, Louisiana~~. Prior to February 2010, Acadia Unit 1 was owned by Acadia.~~
Acadia Unit 2	Entergy Louisiana’s 580-MW unit, combined cycle, natural gas-fired power plant located at the Acadia Power Station near Eunice, Louisiana~~. Prior to April 29, 2011, Acadia Unit 2 was owned by Acadia.~~
Acadiana Load Pocket	An area in south central Louisiana that has experienced transmission constraints caused by local load and lack of generation. Transmission within the Acadiana Load Pocket is owned by several entities, including Cleco Power.
AFUDC	Allowance for Funds Used During Construction
Amended Lignite Mining Agreement	Amended and restated lignite mining agreement effective December 29, 2009
AMI	Advanced Metering Infrastructure
APH	Acadia Power Holdings LLC, a wholly owned subsidiary of Midstream
Attala	Attala Transmission LLC, a wholly owned subsidiary of Cleco Corporation
Cajun	Cajun Gas Energy L.L.C. ~~In conjunction with the disposition of Acadia Unit 2 on April 29~~, ~~2011,~~a ~~APH~~wholly ~~no longer has any ownership interest in Cajun. From February 23, 2010 to April 29, 2011, Cajun was 50%~~ owned bysubsidiary ~~APH~~of ~~and 50% owned by~~ third parties~~. Prior to February 23, 2010, Cajun was 100% owned by third parties.~~
CERCLA	The Comprehensive Environmental Response, Compensation, and Liability Act of 1980
Cleco Innovations LLC	A wholly owned subsidiary of Cleco Corporation
Cleco Katrina/Rita	Cleco Katrina/Rita Hurricane Recovery Funding LLC, a wholly owned subsidiary of Cleco Power
Coughlin	Coughlin Power Station, a combined-cycle, natural gas-fired power plant located in Evangeline Parish, Louisiana.
CSAPR	The Cross-State Air Pollution Rule
DHLC	Dolet Hills Lignite Company, LLC, a wholly owned subsidiary of SWEPCO
Diversified Lands	Diversified Lands LLC, a wholly owned subsidiary of Cleco Innovations LLC
Dodd-Frank Act	The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law on July 21, 2010.
DOE	United States Department of Energy
EAC	Environmental Adjustment Clause
Entergy	Entergy Corporation
Entergy Gulf States	Entergy Gulf States Louisiana, L.L.C., formerly Entergy Gulf States, Inc.
Entergy Louisiana	Entergy Louisiana, LLC
Entergy Mississippi	Entergy Mississippi, Inc.
Entergy Services	Entergy Services, Inc., as agent for Entergy Louisiana and Entergy Gulf States
EPA	United States Environmental Protection Agency
ERO	Electric Reliability Organization
ESPP	Cleco Corporation Employee Stock Purchase Plan
Evangeline	Cleco Evangeline LLC, a wholly owned subsidiary of Midstream
Evangeline 2010 Tolling Agreement	Capacity Sale and Tolling Agreement between Evangeline and JPMVEC, which was executed in February 2010 and expired on December 31, 2011
FAC	Fuel Adjustment Clause
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
FRP	Formula Rate Plan
GAAP	Generally Accepted Accounting Principles in the United States
GO Zone	Gulf Opportunity Zone Act of 2005 (Public Law 109-135)
ICT	Independent Coordinator of Transmission
Interconnection Agreement	One of two Interconnection Agreement and Real Estate Agreements, one between Attala and Entergy Mississippi, and the other between Perryville and Entergy Louisiana
IRP	Integrated Resource Planning
IRS	Internal Revenue Service
JPMVEC	J.P. Morgan Ventures Energy Corporation. In September 2008, BE Louisiana LLC (an indirect wholly owned subsidiary of JPMorgan Chase & Co.) was merged into JPMVEC.
kWh	Kilowatt-hour(s) as applicable
LIBOR	London Inter-Bank Offer Rate
Lignite Mining Agreement	Dolet Hills Mine Lignite Mining Agreement, dated as of May 31, 2001
LPSC	Louisiana Public Service Commission
LTICP	Cleco Corporation Long-Term Incentive Compensation Plans
Madison Unit 3	A 600-MW solid-fuel generating unit at Cleco Power’s plant site in Boyce, Louisiana
Midstream	Cleco Midstream Resources LLC, a wholly owned subsidiary of Cleco Corporation
MISO	Midwest Independent Transmission System Operator
Moody’s	Moody’s Investors Service
MW	Megawatt(s) as applicable
NERC	North American Electric Reliability Corporation
NMTC	New Markets Tax Credit

CLECO CORPORATION CLECO POWER ~~2012~~2013 ~~3RD~~1ST QUARTER FORM 10-Q

ABBREVIATION OR ACRONYM	DEFINITION
LPSC	Louisiana Public Service Commission
LTICP	Cleco Corporation Long-Term Incentive Compensation Plan
Madison Unit 3	A 600-MW solid-fuel generating unit at Cleco Power’s plant site in Boyce, Louisiana that commenced commercial operation on February 12, 2010.
Midstream	Cleco Midstream Resources LLC, a wholly owned subsidiary of Cleco Corporation
MMBtu	Million British thermal units
Moody’s	Moody’s Investors Service
MW	Megawatt(s) as applicable
NERC	North American Electric Reliability Corporation
NMTC Fund	USB NMTC Fund 2008-1 LLC was formed to invest in projects qualifying for New Markets Tax Credits and Solar Projects
Not Meaningful	A percentage comparison of these items is not statistically meaningful because the percentage difference is greater than 1,000%
NOx	Nitrogen oxides
OATT	Open Access Transmission Tariff
OCI	Other Comprehensive Income
Oxbow	Oxbow Lignite Company, LLC, 50% owned by Cleco Power and 50% owned by SWEPCO
PCAOB	Public Company Accounting Oversight Board
PCB	Polychlorinated biphenyl
Perryville	Perryville Energy Partners, L.L.C., a wholly owned subsidiary of Cleco Corporation
PLR	Private Letter Ruling
Power Purchase Agreement	Power Purchase Agreement, dated as of January 28, 2004, between Perryville and Entergy Services
PPACA	Patient Protection and Affordable Care Act (HR 3590)
PRP	Potentially responsible party
Registrant(s)	Cleco Corporation and Cleco Power
RFP	Request for Proposal
RTO	Regional Transmission Organization
Sale Agreement	Purchase and Sale Agreement, dated as of January 28, 2004, between Perryville and Entergy Louisiana
SEC	Securities and Exchange Commission
SERP	Cleco Corporation Supplemental Executive Retirement Plan
SPP	Southwest Power Pool
Support Group	Cleco Support Group LLC, a wholly owned subsidiary of Cleco Corporation
SWEPCO	Southwestern Electric Power Company, a wholly owned subsidiary of American Electric Power Company, Inc.
VaR	Value-at-~~risk~~Risk
VIE	Variable Interest Entity

CLECO CORPORATION CLECO POWER ~~2012~~2013 ~~3RD~~1ST QUARTER FORM 10-Q

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Combined Quarterly Report on Form 10-Q includes “forward-looking statements” about future events, circumstances, and results. All statements other than statements of historical fact included in this Combined Quarterly Report are forward-looking statements, including, without limitation, future capital expenditures; projections, including with respect to base revenue; business strategies; goals, beliefs, plans, and objectives; competitive strengths; market developments; development and operation of facilities; growth in sales volume; meeting capacity requirements, including through RFPs; expansion of service to certain customers and service to new customers; future environmental regulations and remediation liabilities; electric customer credits; and the anticipated outcome of various regulatory and legal proceedings. Although the Registrants believe that the expectations reflected in such forward-looking statements are reasonable, such forward-looking statements are based on numerous assumptions (some of which may prove to be incorrect) and are subject to risks and uncertainties that could cause the actual results to differ materially from the Registrants’ expectations. In addition to any assumptions and other factors referred to specifically in connection with these forward-looking statements, the following list identifies some of the factors that could cause the Registrants’ actual results to differ materially from those contemplated in any of the Registrants’ forward-looking statements:

•

factors affecting utility operations, such as unusual weather conditions or other natural phenomena, catastrophic weather-related damage (such as hurricanes and other storms or severe drought conditions), unscheduled generation outages, unanticipated maintenance or repairs, unanticipated changes to fuel costs, fuel supply costs or availability constraints due to higher demand, shortages, transportation problems, or other developments, fuel mix of Cleco’s generation facilities, decreased customer load, environmental incidents, environmental compliance costs, and power transmission system constraints,


•	Cleco Corporation’s holding company structure and its dependence on the earnings, dividends, or distributions from its subsidiaries to meet its debt obligations and pay dividends on its common stock,

• Cleco Power’s ability to recover costs incurred on projects funded, in whole or in part, through government grants,


•	Cleco Power’s ability to maintain its right to sell wholesale generation at market-based rates within its control area,

• dependence of Cleco Power for energy from sources other than its facilities and ~~the uncertainty of~~ future sources of such additional energy,


•	nonperformance by and creditworthiness of counterparties under power purchase agreements, or the restructuring of those agreements, including possible termination,


•	nonperformance by and creditworthiness of the guarantor counterparty of the NMTC Fund,

• regulatory factors such as changes in rate-setting policies, recovery of investments made under traditional regulation, recovery of storm restoration costs, the frequency and timing of rate increases or decreases, the results of periodic NERC and LPSC audits, the formation of ICTs, including participation in an RTO and Cleco Power’s ability to recover

~~and LPSC audits, the formation of ICTs, including possible participation in an RTO and Cleco Power’s ability to recover~~ related transmission upgrade costs, and the compliance with the ~~Electric~~ERO ~~Reliability Organization~~ reliability standards for bulk power systems by Cleco Power and Evangeline,


•	reliance on third parties for determination of Cleco Power’s commitments and obligations to markets for generation resources and reliance on third party transmission services,


•	financial or regulatory accounting principles or policies imposed by FASB, the SEC, the PCAOB, FERC, the LPSC, or similar entities with regulatory or accounting oversight,


•	economic conditions, including the ability of customers to continue paying utility bills, related growth and/or down-sizing of businesses in Cleco’s service area, monetary fluctuations, changes in commodity prices, and inflation rates,


•	the current global and U.S. economic environment,


•	credit ratings of Cleco Corporation and Cleco Power,


•	ability to remain in compliance with debt covenants,


•	changing market conditions and a variety of other factors associated with physical energy, financial transactions, and energy service activities, including, but not limited to, price, basis, credit, liquidity, volatility, capacity, transmission, interest rates, and warranty risks,


•	the availability and use of alternative sources of energy and technologies,

• the imposition of energy efficiency requirements or of increased conservation efforts of customers,

• reliability of Cleco Power’s and Midstream’s generating facilities,

• acts of terrorism, cyber attacks, data security breaches or other attempts to disrupt Cleco'’s business or the business of third parties, or other man-made disasters,


•	availability or cost of capital resulting from changes in Cleco’s business or financial condition, interest rates, or market perceptions of the electric utility industry and energy-related industries,


•	changes in tax laws or disallowances of uncertain tax positions that may result in a change to tax benefits or expenses,


•	employee work force factors, including work stoppages and changes in key executives,

• legal, environmental, and regulatory delays and other obstacles associated with mergers, acquisitions, reorganizations, investments in joint ventures, or other capital projects, including the ~~joint project to upgrade the Acadiana Load Pocket transmission system and the~~ AMI project,


•	costs and other effects of legal and administrative proceedings, settlements, investigations, claims, and other matters,


•	changes in federal, state, or local laws and changes in tax laws or rates, or regulating policies,


•	the impact of current or future environmental laws and regulations, including those related to greenhouse gases

CLECO CORPORATION CLECO POWER ~~2012~~2013 ~~3RD~~1ST QUARTER FORM 10-Q

and energy efficiency, ~~which~~that could limit or terminate the operation of certain generating units, increase costs, or reduce customer demand for electricity, ~~or otherwise materially adversely impact the Registrants’ financial condition or results of operations,~~

• the ability of Cleco Power to recover from its customers the costs of compliance with environmental laws and regulations, and

• the ability of Dolet Hills lignite reserve to provide sufficient fuel to the Dolet Hills Power Station until at least 2026.

For more discussion of these factors and other factors that could cause actual results to differ materially from those contemplated in the Registrants’ forward-looking statements, please read "“Risk Factors"” in ~~this report and~~ the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, ~~2011~~2012. All subsequent written and oral forward-looking statements attributable to the Registrants or persons acting on their behalf are expressly qualified in their entirety by the factors identified above.

The Registrants undertake no obligation to update any forward-looking statements, whether as a result of changes in actual results, changes in assumptions, or other factors affecting such statements.

CLECO CORPORATION CLECO POWER ~~2012~~2013 ~~3RD~~1ST QUARTER FORM 10-Q

PART I — FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Cleco Corporation

These unaudited condensed consolidated financial statements should be read in conjunction with Cleco Corporation’s Consolidated Financial Statements and Notes included in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, ~~2011~~2012. For more information on the basis of presentation, see “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Basis of Presentation.”

CLECO CORPORATION CLECO POWER ~~2012~~2013 ~~3RD~~1ST QUARTER FORM 10-Q

CLECO CORPORATION
Condensed Consolidated Statements of Income (Unaudited)
	FOR THE THREE MONTHS ENDED SEPT. 30,
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)	~~2012~~2013			~~2011~~2012
Operating revenue
Electric operations	$	~~282~~229,~~894~~425		$	~~324~~209,~~532~~590
Tolling operations	—			9,133
Other operations	11,543			10,946
Other operations	15,408			16,064
Gross operating revenue	240,968			220,536
Gross operating revenue	298,302			349,729
Electric customer credits	(21		)	2,237
Electric customer credits	(930		)	1,852
Operating revenue, net	240,947			222,773
Operating revenue, net	297,372			351,581
Operating expenses
Fuel used for electric generation	7985,~~701~~365			~~122~~73,~~774~~064
Power purchased for utility customers	194,~~364~~856			258,~~473~~637
Other operations	3026,~~517~~924			3227,~~138~~700
Maintenance	2017,~~059~~635			1417,~~587~~235
Depreciation	34,~~931~~032			31,~~237~~846
Taxes other than income taxes	912,~~455~~634			910,~~845~~030
(Gain) loss on sale of assets	(2		)	27
Loss (gain) on sale of assets	1,034			(33		)
Total operating expenses	~~194~~182,~~025~~480			~~236~~168,~~081~~479
Operating income	~~103~~58,~~347~~467			~~115~~54,~~500~~294
Interest income	~~132~~201			~~509~~34
Allowance for other funds used during construction	1,~~882~~164			~~902~~1,017
Equity loss from investees, before tax	—			(1		)
Equity income from investees, before tax	—			1
Other income	12,~~834~~273			29,~~128~~375
Other expense	(~~1,232~~435		)	(~~2,680~~656		)
Interest charges
Interest charges, including amortization of debt expense, premium, and discount, net	2221,~~610~~831			2620,~~105~~968
Allowance for borrowed funds used during construction	(~~644~~375		)	(~~326~~344		)
Total interest charges	21,~~966~~456			2520,~~779~~624
Income before income taxes	8340,~~997~~214			9043,~~579~~441
Federal and state income tax expense	2013,~~179~~081			2413,~~737~~410
Net income applicable to common stock	$	6327,~~818~~133		$	6530,~~842~~031
Average number of basic common shares outstanding	60,~~346~~399,~~476~~697			60,~~467~~372,~~595~~567
Average number of diluted common shares outstanding	60,~~599~~667,~~203~~401			60,~~873~~598,~~311~~975
Basic earnings per share
Net income applicable to common stock	$	10.0645		$	10.0950
Diluted earnings per share
Net income applicable to common stock	$	10.0545		$	10.0850
Cash dividends paid per share of common stock	$	0.3375		$	0.283125
The accompanying notes are an integral part of the condensed consolidated financial statements.

CLECO CORPORATION CLECO POWER ~~2012~~2013 ~~3RD~~1ST QUARTER FORM 10-Q

CLECO CORPORATION
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE THREE MONTHS ENDED SEPT. 30,
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	~~2012~~2013			~~2011~~2012
Net income	$	6327,~~818~~133		$	6530,~~842~~031
Other comprehensive income (loss), net of tax:
Other comprehensive income, net of tax:
Amortization of postretirement benefit net loss (net of tax expense of $239 in 2012 and $178 in 2011)	332			269
Net gain on prior service cost (net of tax expense of $336 in 2013 and $165 in 2012)	536			363
Cash flow hedges:
Net gain on cash flow hedges (net of tax expense of $836 in 2013 and $2,774 in 2012)	1,337			4,435
Net derivative gain (loss) (net of tax expense of $309 in 2012 and tax benefit of $11,529 in 2011)	493			(18,433		)
Total other comprehensive income, net of tax	1,873			4,798
Reclassification of net gain to interest charges (net of tax benefit of $7 in 2012 $34 in 2011)	(10		)	(55		)
Comprehensive income, net of tax	$	29,006		$	34,829
Total other comprehensive income (loss), net of tax	815			(18,219		)
Comprehensive income, net of tax	$	64,633		$	47,623
The accompanying notes are an integral part of the condensed consolidated financial statements.

CLECO CORPORATION CLECO POWER ~~2012~~2013 ~~3RD~~1ST QUARTER FORM 10-Q

CLECO CORPORATION
Condensed Consolidated Statements of Income (Unaudited)
Condensed Consolidated Balance Sheets (Unaudited)
	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	AT MAR. 31, 2013			AT DEC. 31, 2012
(THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)	2012			2011
Assets
Operating revenue
Current assets
Electric operations	$	720,776		$	823,484
Cash and cash equivalents	$	46,467		$	31,020
Tolling operations	—			16,137
Restricted cash and cash equivalents	3,278			8,781
Other operations	38,464			41,775
Customer accounts receivable (less allowance for doubtful accounts of $826 in 2013 and $1,105 in 2012)	39,636			39,293
Affiliate revenue	—			202
Other accounts receivable	24,219			37,741
Gross operating revenue	759,240			881,598
Taxes receivable, net	—			34,612
Electric customer credits	1,025			(3,405		)
Unbilled revenue	23,817			28,662
Operating revenue, net	760,265			878,193
Fuel inventory, at average cost	34,812			46,867
Operating expenses
Material and supplies inventory, at average cost	59,668			58,232
Fuel used for electric generation	207,764			298,009
Accumulated deferred federal and state income taxes, net	43,784			79,353
Power purchased for utility customers	44,069			60,590
Accumulated deferred fuel	3,981			7,833
Other operations	86,901			90,281
Cash surrender value of company-/trust-owned life insurance policies	59,437			57,346
Maintenance	61,478			59,666
Prepayments	4,240			5,951
Depreciation	99,028			91,749
Regulatory assets - other	9,379			11,095
Taxes other than income taxes	29,198			28,770
Other current assets	3,618			552
Gain on sale of assets	(57		)	(468		)
Total current assets	356,336			447,338
Total operating expenses	528,381			628,597
Property, plant, and equipment
Operating income	231,884			249,596
Property, plant, and equipment	4,185,832			4,140,194
Interest income	163			794
Accumulated depreciation	(1,332,760		)	(1,311,273		)
Allowance for other funds used during construction	4,298			3,757
Net property, plant, and equipment	2,853,072			2,828,921
Equity income from investees, before tax	1			62,051
Construction work in progress	172,093			180,540
Other income	24,223			3,330
Total property, plant, and equipment, net	3,025,165			3,009,461
Other expense	(2,718		)	(2,861		)
Equity investment in investees	14,541			14,540
Interest charges
Prepayments	4,344			4,261
Interest charges, including amortization of debt expense, premium, and discount, net	64,671			79,368
Restricted cash and cash equivalents	5,788			5,440
Allowance for borrowed funds used during construction	(1,466		)	(1,357		)
Restricted investments	10,853			10,852
Total interest charges	63,205			78,011
Regulatory assets - deferred taxes, net	211,617			210,445
Income before income taxes	194,646			238,656
Regulatory assets - other	286,978			289,570
Federal and state income tax expense	54,110			73,451
Net investment in direct financing lease	13,538			13,542
Net income	140,536			165,205
Intangible asset	117,401			120,545
Preferred dividends requirements	—			26
Other deferred charges	20,571			21,355
Preferred stock redemption costs	—			112
Total assets	$	4,067,132		$	4,147,349
Net income applicable to common stock	$	140,536		$	165,067
Average number of basic common shares outstanding	60,375,538			60,549,860
Average number of diluted common shares outstanding	60,626,471			60,830,251
Basic earnings per share
Net income applicable to common stock	$	2.33		$	2.73
Diluted earnings per share
Net income applicable to common stock	$	2.32		$	2.71
Cash dividends paid per share of common stock	$	0.9625		$	0.81
The accompanying notes are an integral part of the condensed consolidated financial statements.



(Continued on next page)

CLECO CORPORATION CLECO POWER ~~2012~~2013 ~~3RD~~1ST QUARTER FORM 10-Q

CLECO CORPORATION
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
Condensed Consolidated Balance Sheets (Unaudited) (Continued)
	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	AT MAR. 31, 2013			AT DEC. 31, 2012
(THOUSANDS)	2012			2011
Liabilities and shareholders’ equity
Net income	$	140,536		$	165,205
Liabilities
Other comprehensive income (loss), net of tax:
Current liabilities
Amortization of postretirement benefit net loss (net of tax expense of $670 in 2012 and $454 in 2011)	1,221			910
Long-term debt due within one year	$	16,625		$	91,140
Cash flow hedges:
Accounts payable	66,131			102,695
Net derivative loss (net of tax benefit of $282 in 2012 and $11,529 in 2011)	(451		)	(18,433		)
Customer deposits	46,576			45,553
Reclassification of net loss (gain) to interest charges (net of tax expense of $15 in 2012 and tax benefit of $103 in 2011)	24			(164		)
Provision for rate refund	4,186			4,165
Reclassification of ineffectiveness to regulatory asset (net of tax expense of $982 in 2012)	1,570			—
Taxes payable	21,415			—
Total other comprehensive income (loss), net of tax	2,364			(17,687		)
Interest accrued	26,233			12,957
Comprehensive income, net of tax	$	142,900		$	147,518
Interest rate risk management liability	424			2,627
Regulatory liabilities - other	3,296			8,255
Deferred compensation	10,163			9,626
Uncertain tax positions	686			686
Other current liabilities	15,765			16,926
Total current liabilities	211,500			294,630
Deferred credits
Accumulated deferred federal and state income taxes, net	740,436			762,992
Accumulated deferred investment tax credits	5,975			6,252
Postretirement benefit obligations	154,107			186,746
Restricted storm reserve	16,631			16,285
Uncertain tax positions	2,184			2,184
Tax credit fund investment, net	68,773			78,840
Contingent sale obligations	7,850			8,150
Other deferred credits	36,317			34,799
Total deferred credits	1,032,273			1,096,248
Long-term debt, net	1,314,229			1,257,258
Total liabilities	2,558,002			2,648,136
Commitments and Contingencies (Note 11)
Shareholders’ equity
Common shareholders’ equity
Common stock, $1 par value, authorized 100,000,000 shares, issued 61,047,006 and 60,961,570 shares and outstanding 60,444,140 and 60,355,545 shares at March 31, 2013, and December 31, 2012, respectively	61,047			60,962
Premium on common stock	417,879			416,619
Retained earnings	1,081,663			1,075,074
Treasury stock, at cost, 602,866 and 606,025 shares at March 31, 2013, and December 31, 2012, respectively	(20,962		)	(21,072		)
Accumulated other comprehensive loss	(30,497		)	(32,370		)
Total shareholders’ equity	1,509,130			1,499,213
Total liabilities and shareholders’ equity	$	4,067,132		$	4,147,349
The accompanying notes are an integral part of the condensed consolidated financial statements.

CLECO CORPORATION CLECO POWER ~~2012~~2013 ~~3RD~~1ST QUARTER FORM 10-Q

CLECO CORPORATION
Condensed Consolidated Balance Sheets (Unaudited)
Condensed Consolidated Statements of Cash Flows (Unaudited)
(THOUSANDS)	AT SEPT. 30, 2012			AT DEC. 31, 2011
	FOR THE THREE MONTHS ENDED MAR. 31,
Assets
(THOUSANDS)	2013			2012
Current assets
Operating activities
Cash and cash equivalents	$	68,364		$	93,576
Net income	$	27,133		$	30,031
Restricted cash and cash equivalents	3,406			8,761
Adjustments to reconcile net income to net cash provided by operating activities:
Customer accounts receivable (less allowance for doubtful accounts of $1,031 in 2012 and $1,128 in 2011)	47,635			37,813
Depreciation and amortization	38,586			38,445
Other accounts receivable (less allowance for doubtful accounts of $26 in 2012 and $8 in 2011)	36,334			42,051
Unearned compensation expense	1,510			1,329
Taxes receivable	8,353			44,584
Allowance for other funds used during construction	(1,164		)	(1,017		)
Unbilled revenue	31,505			30,129
Net deferred income taxes	10,030			889
Fuel inventory, at average cost	53,290			41,845
Deferred fuel costs	4,493			7,433
Material and supplies inventory, at average cost	58,212			53,714
Cash surrender value of company-/trust-owned life insurance	(2,071		)	(1,806		)
Accumulated deferred federal and state income taxes, net	75,693			29,249
Changes in assets and liabilities:
Accumulated deferred fuel	1,715			2,136
Accounts receivable	12,059			7,812
Cash surrender value of company-/trust-owned life insurance policies	56,647			51,073
Unbilled revenue	4,845			4,302
Prepayments	5,095			5,384
Fuel, materials and supplies inventory	10,619			(4,187		)
Regulatory assets - other	12,810			13,028
Prepayments	1,628			1,820
Other current assets	398			3,442
Accounts payable	(37,345		)	(56,725		)
Total current assets	459,457			456,785
Customer deposits	3,074			2,952
Property, plant, and equipment
Postretirement benefit obligations	(32,422		)	2,831
Property, plant, and equipment	4,082,636			4,023,655
Regulatory assets and liabilities, net	(4,836		)	(4,436		)
Accumulated depreciation	(1,291,862		)	(1,230,783		)
Other deferred accounts	2,121			(1,883		)
Net property, plant, and equipment	2,790,774			2,792,872
Taxes accrued	55,930			12,112
Construction work in progress	183,529			101,027
Interest accrued	13,276			4,511
Total property, plant, and equipment, net	2,974,303			2,893,899
Other operating	(4,019		)	1,306
Equity investment in investees	14,541			14,540
Net cash provided by operating activities	103,447			45,719
Prepayments	4,139			4,770
Investing activities
Restricted cash and cash equivalents, less current portion	13,320			27,067
Additions to property, plant, and equipment	(44,887		)	(43,487		)
Restricted investments	4,470			—
Allowance for other funds used during construction	1,164			1,017
Regulatory assets and liabilities - deferred taxes, net	219,433			214,421
Property, plant, and equipment grants	729			1,212
Regulatory assets - other	258,344			269,444
Return of equity investment in tax credit fund	9			10,215
Net investment in direct financing lease	13,546			13,633
Contributions to tax credit fund	(12,081		)	(18,540		)
Intangible asset	123,608			133,595
Transfer of cash from restricted accounts	5,154			5,248
Other deferred charges	21,732			22,048
Purchase of restricted investments	(1,447		)	—
Total assets	$	4,106,893		$	4,050,202
Maturity of restricted investments	1,409			—
The accompanying notes are an integral part of the condensed consolidated financial statements.
Other investing	240			(597		)
Net cash used in investing activities	(49,710		)	(44,932		)

(Continued on next page)

CLECO CORPORATION CLECO POWER ~~2012~~2013 ~~3RD~~1ST QUARTER FORM 10-Q

CLECO CORPORATION
Condensed Consolidated Balance Sheets (Unaudited) (Continued)
Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued)
(THOUSANDS)	AT SEPT. 30, 2012			AT DEC. 31, 2011
	FOR THE THREE MONTHS ENDED MAR. 31,
Liabilities and shareholders’ equity
(THOUSANDS)	2013			2012
Liabilities
Financing activities
Current liabilities
Draws on credit facility	108,000			—
Long-term debt due within one year	$	90,937		$	24,258
Payments on credit facility	(118,000		)	(10,000		)
Accounts payable	104,435			129,308
Issuance of long-term debt	60,000			—
Customer deposits	45,197			43,091
Retirement of long-term debt	(7,129		)	(17,847		)
Provision for rate refund	2,526			7,323
Repurchase of long-term debt	(60,000		)	—
Interest accrued	27,249			22,642
Dividends paid on common stock	(20,593		)	(19,144		)
Energy risk management liabilities, net	—			5,336
Other financing	(568		)	(123		)
Interest rate risk management liability	4,063			3,330
Net cash used in financing activities	(38,290		)	(47,114		)
Regulatory liabilities - other	8,251			33,019
Net increase (decrease) in cash and cash equivalents	15,447			(46,327		)
Deferred compensation	9,604			8,302
Cash and cash equivalents at beginning of period	31,020			93,576
Uncertain tax positions	31			27,239
Cash and cash equivalents at end of period	$	46,467		$	47,249
Other current liabilities	17,559			17,154
Supplementary cash flow information
Total current liabilities	309,852			321,002
Interest paid (net of amount capitalized)	$	6,326		$	8,251
Deferred credits
Income taxes (refunded) paid, net	$	(45,343	)	$	6
Accumulated deferred federal and state income taxes, net	760,602			649,926
Supplementary non-cash investing and financing activities
Accumulated deferred investment tax credits	6,547			7,432
Accrued additions to property, plant, and equipment	$	9,191		$	6,974
Postretirement benefit obligations	138,414			133,274
Non-cash additions to property, plant, and equipment, net	$	1,134		$	3,333
Regulatory liabilities - other	—			7,303
Issuance of common stock – ESPP	$	78		$	86
Restricted storm reserve	16,019			24,880
Uncertain tax positions	2,184			23,494
Tax credit fund investment, net	85,307			61,507
Contingent sale obligations	10,350			29,357
Other deferred credits	38,580			35,114
Total deferred credits	1,058,003			972,287
Long-term debt, net	1,237,184			1,337,056
Total liabilities	2,605,039			2,630,345
Commitments and Contingencies (Note 11)
Shareholders’ equity
Common shareholders’ equity
Common stock, $1 par value, authorized 100,000,000 shares, issued 60,956,882 and 60,702,342 shares and outstanding 60,350,481 and 60,291,939 shares at September 30, 2012, and December 31, 2011, respectively	60,957			60,702
Premium on common stock	415,289			409,904
Retained earnings	1,072,468			990,605
Treasury stock, at cost, 606,401 and 410,403 shares at September 30, 2012, and December 31, 2011, respectively	(21,085		)	(13,215		)
Accumulated other comprehensive loss	(25,775		)	(28,139		)
Total shareholders’ equity	1,501,854			1,419,857
Total liabilities and shareholders’ equity	$	4,106,893		$	4,050,202
The accompanying notes are an integral part of the condensed consolidated financial statements.

CLECO CORPORATION CLECO POWER ~~2012~~2013 ~~3RD~~1ST QUARTER FORM 10-Q

CLECO CORPORATION
Condensed Consolidated Statements of Cash Flows (Unaudited)
	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2012			2011
Operating activities
Net income	$	140,536		$	165,205
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	122,676			114,104
Return on equity investment in investees	—			58,665
Income from equity investments	(1		)	(62,051		)
Unearned compensation expense	4,986			6,065
Allowance for other funds used during construction	(4,298		)	(3,757		)
Net deferred income taxes	8,040			45,336
Deferred fuel costs	(4,218		)	(6,422		)
Cash surrender value of company-/trust-owned life insurance	(2,841		)	1,055
Changes in assets and liabilities:
Accounts receivable	(13,247		)	(21,691		)
Accounts and notes receivable, affiliate	257			1,074
Unbilled revenue	(1,376		)	11,538
Fuel, materials and supplies inventory	(15,943		)	40,675
Prepayments	920			2,089
Accounts payable	(25,422		)	(37,467		)
Customer deposits	8,772			9,718
Postretirement benefit obligations	5,459			(56,743		)
Regulatory assets and liabilities, net	(30,532		)	(40,204		)
Contingent sale obligations	—			10,900
Other deferred accounts	(17,388		)	2,181
Taxes accrued	36,021			12,946
Interest accrued	7,616			10,738
Energy risk management assets and liabilities, net	(28		)	3,880
Other operating	4,615			(4,244		)
Net cash provided by operating activities	224,604			263,590
Investing activities
Additions to property, plant, and equipment	(177,146		)	(146,617		)
Allowance for other funds used during construction	4,298			3,757
Property, plant, and equipment grants	15,075			1,593
Insurance reimbursement for property loss	5,454			—
Cash from reconsolidation of VIEs	—			3,879
Return of equity investment in investees	—			89,654
Return of equity investment in tax credit fund	37,132			244
Contributions to tax credit fund	(46,859		)	(18,479		)
Transfer of cash from restricted accounts	19,102			12,144
Purchase of restricted investments	(4,340		)	—
Other investing	(1,934		)	(1,220		)
Net cash used in investing activities	(149,218		)	(55,045		)

(Continued on next page)

CLECO CORPORATION CLECO POWER 2012 3RD QUARTER FORM 10-Q

CLECO CORPORATION
Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued)
	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2012			2011
Financing activities
Retirement of short-term debt	—			(150,000		)
Draws on credit facility	—			10,000
Payments on credit facility	(10,000		)	(25,000		)
Issuance of long-term debt	50,000			—
Retirement of long-term debt	(74,368		)	(12,269		)
Repurchase of common stock	(8,007		)	(13,009		)
Dividends paid on common stock	(58,459		)	(49,170		)
Other financing	236			(1,993		)
Net cash used in financing activities	(100,598		)	(241,441		)
Net decrease in cash and cash equivalents	(25,212		)	(32,896		)
Cash and cash equivalents at beginning of period	93,576			191,128
Cash and cash equivalents at end of period	$	68,364		$	158,232
Supplementary cash flow information
Interest paid (net of amount capitalized)	$	48,212		$	53,936
Income taxes (refunded) paid, net	$	(131	)	$	18,241
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	16,657		$	11,491
Non-cash additions to property, plant, and equipment, net	$	18,395		$	6,252
Issuance of common stock – ESPP	$	257		$	241
The accompanying notes are an integral part of the condensed consolidated financial statements.

CLECO CORPORATION CLECO POWER 2012 3RD QUARTER FORM 10-Q

PART I — FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Cleco Power

These unaudited condensed consolidated financial statements should be read in conjunction with Cleco Power’s Consolidated Financial Statements and Notes included in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, ~~2011~~2012. For more information on the basis of presentation, see “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Basis of Presentation.”



CLECO CORPORATION
CLECO POWER		2013 1ST QUARTER FORM 10-Q



CLECO POWER

Condensed Consolidated Statements of Income (Unaudited)
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)	2013			2012
Operating revenue
Electric operations	$	229,425		$	209,590
Other operations	11,038			10,448
Affiliate revenue	336			345
Gross operating revenue	240,799			220,383
Electric customer credits	(21		)	2,237
Operating revenue, net	240,778			222,620
Operating expenses
Fuel used for electric generation	85,365			73,064
Power purchased for utility customers	9,693			9,871
Other operations	25,373			26,343
Maintenance	14,794			16,014
Depreciation	32,330			30,090
Taxes other than income taxes	11,458			8,932
Total operating expenses	179,013			164,314
Operating income	61,765			58,306
Interest income	198			30
Allowance for other funds used during construction	1,164			1,017
Other income	697			1,096
Other expense	(444		)	(651		)
Interest charges
Interest charges, including amortization of debt expense, premium, and discount, net	21,724			18,830
Allowance for borrowed funds used during construction	(375		)	(344		)
Total interest charges	21,349			18,486
Income before income taxes	42,031			41,312
Federal and state income tax expense	14,238			14,507
Net income	$	27,793		$	26,805
The accompanying notes are an integral part of the condensed consolidated financial statements.



CLECO CORPORATION
CLECO POWER		2013 1ST QUARTER FORM 10-Q



CLECO POWER

Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2013		2012
Net income	$	27,793	$	26,805
Other comprehensive income, net of tax:
Net gain on prior service cost (net of tax expense of $157 in 2013 and $75 in 2012)	251		204
Net gain on cash flow hedges (net of tax expense of $836 in 2013 and $2,774 in 2012)	1,337		4,435
Total other comprehensive income, net of tax	1,588		4,639
Comprehensive income, net of tax	$	29,381	$	31,444
The accompanying notes are an integral part of the condensed consolidated financial statements.

CLECO CORPORATION CLECO POWER ~~2012~~2013 ~~3RD~~1ST QUARTER FORM 10-Q

CLECO POWER
Condensed Consolidated Statements of Income (Unaudited)
Condensed Consolidated Balance Sheets (Unaudited)
	FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	AT MAR. 31, 2013			AT DEC. 31, 2012
(THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)	2012			2011
Assets
Operating revenue
Utility plant and equipment
Electric operations	$	282,894		$	324,532
Property, plant, and equipment	$	3,917,225		$	3,871,940
Other operations	14,905			15,565
Accumulated depreciation	(1,246,863		)	(1,227,078		)
Affiliate revenue	343			347
Net property, plant, and equipment	2,670,362			2,644,862
Gross operating revenue	298,142			340,444
Construction work in progress	166,100			176,584
Electric customer credits	(930		)	1,852
Total utility plant, net	2,836,462			2,821,446
Operating revenue, net	297,212			342,296
Current assets
Operating expenses
Cash and cash equivalents	42,439			23,368
Fuel used for electric generation	79,701			122,774
Restricted cash and cash equivalents	3,278			8,781
Power purchased for utility customers	33,254			25,473
Customer accounts receivable (less allowance for doubtful accounts of $826 in 2013 and $1,105 in 2012)	39,636			39,293
Other operations	29,063			30,451
Accounts receivable - affiliate	1,125			2,991
Maintenance	16,095			15,768
Other accounts receivable	23,881			37,562
Depreciation	33,199			29,539
Unbilled revenue	23,817			28,662
Taxes other than income taxes	8,390			8,802
Fuel inventory, at average cost	34,812			46,867
Gain on sale of assets	—			(6		)
Material and supplies inventory, at average cost	56,872			55,472
Total operating expenses	199,702			232,801
Accumulated deferred federal and state income taxes, net	53,897			87,286
Operating income	97,510			109,495
Accumulated deferred fuel	3,981			7,833
Interest income	129			276
Cash surrender value of company-owned life insurance policies	20,944			20,842
Allowance for other funds used during construction	1,882			902
Prepayments	3,270			4,415
Other income	1,188			1,323
Regulatory assets - other	9,379			11,095
Other expense	(1,224		)	(1,201		)
Other current assets	2,685			371
Interest charges
Total current assets	320,016			374,838
Interest charges, including amortization of debt expense, premium, and discount, net	22,606			25,632
Equity investment in investee	14,532			14,532
Allowance for borrowed funds used during construction	(644		)	(326		)
Prepayments	4,344			4,261
Total interest charges	21,962			25,306
Restricted cash and cash equivalents	5,691			5,343
Income before income taxes	77,523			85,489
Restricted investments	10,853			10,852
Federal and state income tax expense	19,740			31,656
Regulatory assets - deferred taxes, net	211,617			210,445
Net income	$	57,783		$	53,833
Regulatory assets - other	286,978			289,570
The accompanying notes are an integral part of the condensed consolidated financial statements.
Intangible asset	117,401			120,545
Other deferred charges	19,209			19,897
Total assets	$	3,827,103		$	3,871,729

(Continued on next page)

CLECO CORPORATION CLECO POWER ~~2012~~2013 ~~3RD~~1ST QUARTER FORM 10-Q

CLECO POWER
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
Condensed Consolidated Balance Sheets (Unaudited) (Continued)
	FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	AT MAR. 31, 2013			AT DEC. 31, 2012
(THOUSANDS)	2012			2011
Liabilities and member’s equity
Net income	$	57,783		$	53,833
Member’s equity	$	1,349,300		$	1,319,919
Other comprehensive income (loss), net of tax:
Long-term debt, net	1,299,229			1,232,258
Amortization of postretirement benefit net loss (net of tax expense of $103 in 2012 and $99 in 2011)	124			146
Total capitalization	2,648,529			2,552,177
Cash flow hedges:
Current liabilities
Net derivative gain (loss) (net of tax expense of $309 in 2012 and tax benefit of $11,529 in 2011)	493			(18,433		)
Long-term debt due within one year	16,625			91,140
Reclassification of net gain to interest charges (net of tax benefit of $7 in 2012 and $34 in 2011)	(10		)	(55		)
Accounts payable	57,570			89,782
Total other comprehensive income (loss), net of tax	607			(18,342		)
Accounts payable - affiliate	6,831			10,097
Comprehensive income, net of tax	$	58,390		$	35,491
Customer deposits	46,576			45,553
Provision for rate refund	4,186			4,165
Taxes payable	10,029			1,328
Interest accrued	27,350			13,893
Interest rate risk management liability	424			2,627
Regulatory liabilities - other	3,296			8,255
Other current liabilities	12,220			11,746
Total current liabilities	185,107			278,586
Commitments and Contingencies (Note 11)
Deferred credits
Accumulated deferred federal and state income taxes, net	829,744			845,769
Accumulated deferred investment tax credits	5,975			6,252
Postretirement benefit obligations	104,699			137,637
Restricted storm reserve	16,631			16,285
Uncertain tax positions	222			222
Other deferred credits	36,196			34,801
Total deferred credits	993,467			1,040,966
Total liabilities and member’s equity	$	3,827,103		$	3,871,729
The accompanying notes are an integral part of the condensed consolidated financial statements.

CLECO CORPORATION CLECO POWER ~~2012~~2013 ~~3RD~~1ST QUARTER FORM 10-Q

CLECO POWER
Condensed Consolidated Statements of Income (Unaudited)
Condensed Consolidated Statements of Cash Flows (Unaudited)
	FOR THE NINE MONTHS ENDED SEPT. 30,
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	~~2012~~2013			~~2011~~2012
Operating revenue
Operating activities
Electric operations	$	720,776		$	823,484
Net income	$	27,793		$	26,805
Other operations	36,967			40,261
Adjustments to reconcile net income to net cash provided by operating activities:
Affiliate revenue	1,030			1,041
Depreciation and amortization	35,094			33,049
Gross operating revenue	758,773			864,786
Unearned compensation expense	331			297
Electric customer credits	1,025			(3,405		)
Allowance for other funds used during construction	(1,164		)	(1,017		)
Operating revenue, net	759,798			861,381
Net deferred income taxes	14,560			14,052
Operating expenses
Deferred fuel costs	4,493			7,433
Fuel used for electric generation	207,459			298,009
Cash surrender value of company-owned life insurance	(102		)	(107		)
Power purchased for utility customers	65,493			60,590
Changes in assets and liabilities:
Other operations	82,647			85,162
Accounts receivable	12,098			7,326
Maintenance	51,739			53,962
Accounts and notes receivable, affiliate	2,033			286
Depreciation	93,847			86,650
Unbilled revenue	4,845			4,302
Taxes other than income taxes	26,004			25,585
Fuel, materials and supplies inventory	10,655			(4,105		)
Gain on sale of assets	(1		)	(7		)
Prepayments	1,062			1,085
Total operating expenses	527,188			609,951
Accounts payable	(31,744		)	(47,174		)
Operating income	232,610			251,430
Accounts and notes payable, affiliate	(3,621		)	11,102
Interest income	153			557
Customer deposits	3,074			2,952
Allowance for other funds used during construction	4,298			3,757
Postretirement benefit obligations	(32,903		)	1,673
Other income	3,511			2,168
Regulatory assets and liabilities, net	(4,836		)	(4,436		)
Other expense	(2,698		)	(2,391		)
Other deferred accounts	1,650			(4,795		)
Interest charges
Taxes accrued	8,688			(2,171		)
Interest charges, including amortization of debt expense, premium, and discount, net	62,719			75,386
Interest accrued	13,457			5,330
Allowance for borrowed funds used during construction	(1,466		)	(1,357		)
Other operating	(2,365		)	(220		)
Total interest charges	61,253			74,029
Net cash provided by operating activities	63,098			51,667
Income before income taxes	176,621			181,492
Investing activities
Federal and state income tax expense	54,748			61,935
Additions to property, plant, and equipment	(43,599		)	(42,661		)
Net income	$	121,873		$	119,557
Allowance for other funds used during construction	1,164			1,017
Property, plant, and equipment grants	729			1,212
Transfer of cash from restricted accounts	5,154			5,248
Purchase of restricted investments	(1,447		)	—
Maturity of restricted investments	1,409			—
Other investing	259			271
Net cash used in investing activities	(36,331		)	(34,913		)
Financing activities
Draws on credit facility	90,000			—
Payments on credit facility	(90,000		)	—
Issuance of long-term debt	60,000			—
Retirement of long-term debt	(7,129		)	(17,847		)
Repurchase of long-term debt	(60,000		)	—
Distribution to parent	—			(30,000		)
Other financing	(567		)	(480		)
Net cash used in financing activities	(7,696		)	(48,327		)
Net increase (decrease) in cash and cash equivalents	19,071			(31,573		)
Cash and cash equivalents at beginning of period	23,368			67,458
Cash and cash equivalents at end of period	$	42,439		$	35,885
Supplementary cash flow information
Interest paid (net of amount capitalized)	$	6,260		$	8,180
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	7,634		$	11,262
Non-cash additions to property, plant, and equipment, net	$	1,134		$	3,333
The accompanying notes are an integral part of the condensed consolidated financial statements.

CLECO CORPORATION CLECO POWER ~~2012~~2013 ~~3RD~~1ST QUARTER FORM 10-Q

CLECO POWER
Index to Applicable Notes to the Unaudited Condensed Consolidated Financial Statements of Registrants
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
Note 1	Summary of Significant Accounting Policies	Cleco Corporation and Cleco Power
	FOR THE NINE MONTHS ENDED SEPT. 30,
Note 2	Recent Authoritative Guidance	Cleco Corporation and Cleco Power
(THOUSANDS)	2012			2011
Note 3	Regulatory Assets and Liabilities	Cleco Corporation and Cleco Power
Net income	$	121,873		$	119,557
Note 4	Fair Value Accounting	Cleco Corporation and Cleco Power
Other comprehensive income (loss), net of tax:
Note 5	Debt	Cleco Corporation and Cleco Power
Amortization of postretirement benefit net loss (net of tax expense of $267 in 2012 and $227 in 2011)	555			519
Note 6	Pension Plan and Employee Benefits	Cleco Corporation and Cleco Power
Cash flow hedges:
Note 7	Income Taxes	Cleco Corporation and Cleco Power
Net derivative loss (net of tax benefit of $282 in 2012 and $11,529 in 2011)	(451		)	(18,433		)
Note 8	Disclosures about Segments	Cleco Corporation
Reclassification of net loss (gain) to interest charges (net of tax expense of $15 in 2012 and tax benefit of $103 in 2011)	24			(164		)
Note 9	Electric Customer Credits	Cleco Corporation and Cleco Power
Reclassification of ineffectiveness to regulatory asset (net of tax expense of $982 in 2012)	1,570			—
Note 10	Variable Interest Entities	Cleco Corporation and Cleco Power
Total other comprehensive income (loss), net of tax	1,698			(18,078		)
Note 11	Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees	Cleco Corporation and Cleco Power
Comprehensive income, net of tax	$	123,571		$	101,479
Note 12	Affiliate Transactions	Cleco Corporation and Cleco Power
The accompanying notes are an integral part of the condensed consolidated financial statements.
Note 13	Storm Restoration	Cleco Corporation and Cleco Power
Note 14	Accumulated Other Comprehensive Loss	Cleco Corporation and Cleco Power

CLECO CORPORATION CLECO POWER 2012 3RD QUARTER FORM 10-Q

CLECO POWER
Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT SEPT. 30, 2012			AT DEC. 31, 2011
Assets
Utility plant and equipment
Property, plant, and equipment	$	3,815,608		$	3,759,541
Accumulated depreciation	(1,209,401		)	(1,153,004		)
Net property, plant, and equipment	2,606,207			2,606,537
Construction work in progress	180,777			97,595
Total utility plant, net	2,786,984			2,704,132
Current assets
Cash and cash equivalents	50,578			67,458
Restricted cash and cash equivalents	3,406			8,761
Customer accounts receivable (less allowance for doubtful accounts of $1,031 in 2012 and $1,128 in 2011)	47,635			37,813
Accounts receivable - affiliate	3,373			2,405
Other accounts receivable (less allowance for doubtful accounts of $26 in 2012 and $8 in 2011)	35,969			35,618
Taxes receivable	—			3,197
Unbilled revenue	31,505			30,129
Fuel inventory, at average cost	53,290			41,845
Material and supplies inventory, at average cost	55,465			51,132
Accumulated deferred federal and state income taxes, net	74,116			19,829
Accumulated deferred fuel	1,715			2,136
Cash surrender value of company-owned life insurance policies	20,742			20,433
Prepayments	4,172			4,155
Regulatory assets - other	12,810			13,028
Other current assets	393			375
Total current assets	395,169			338,314
Equity investment in investee	14,532			14,532
Prepayments	4,139			4,770
Restricted cash and cash equivalents, less current portion	13,223			26,970
Restricted investments	4,470			—
Regulatory assets and liabilities - deferred taxes, net	219,433			214,421
Regulatory assets - other	258,344			269,444
Intangible asset	123,608			133,595
Other deferred charges	20,229			20,293
Total assets	$	3,840,131		$	3,726,471

(Continued on next page)

CLECO CORPORATION CLECO POWER 2012 3RD QUARTER FORM 10-Q

CLECO POWER
Condensed Consolidated Balance Sheets (Unaudited) (Continued)
(THOUSANDS)	AT SEPT. 30, 2012		AT DEC. 31, 2011
Liabilities and member’s equity
Member’s equity	$	1,296,433	$	1,230,862
Long-term debt, net	1,237,184		1,327,056
Total capitalization	2,533,617		2,557,918
Current liabilities
Long-term debt due within one year	90,937		24,258
Accounts payable	96,370		115,091
Accounts payable - affiliate	10,069		9,311
Customer deposits	45,197		43,091
Provision for rate refund	2,526		7,323
Taxes payable	20,019		—
Interest accrued	28,806		22,540
Energy risk management liabilities, net	—		5,336
Interest rate risk management liability	4,063		3,330
Regulatory liabilities - other	8,251		33,019
Uncertain tax positions	—		27,465
Other current liabilities	13,580		11,193
Total current liabilities	319,818		301,957
Commitments and Contingencies (Note 11)
Deferred credits
Accumulated deferred federal and state income taxes, net	828,195		675,835
Accumulated deferred investment tax credits	6,547		7,432
Postretirement benefit obligations	98,450		94,147
Regulatory liabilities - other	—		7,303
Restricted storm reserve	16,019		24,880
Uncertain tax positions	222		19,906
Other deferred credits	37,263		37,093
Total deferred credits	986,696		866,596
Total liabilities and member’s equity	$	3,840,131	$	3,726,471
The accompanying notes are an integral part of the condensed consolidated financial statements.

CLECO CORPORATION CLECO POWER 2012 3RD QUARTER FORM 10-Q

CLECO POWER
Condensed Consolidated Statements of Cash Flows (Unaudited)
	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2012			2011
Operating activities
Net income	$	121,873		$	119,557
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	102,724			95,482
Unearned compensation expense	1,327			1,768
Allowance for other funds used during construction	(4,298		)	(3,757		)
Net deferred income taxes	43,259			35,174
Deferred fuel costs	(4,218		)	(6,422		)
Cash surrender value of company-owned life insurance	(308		)	(277		)
Changes in assets and liabilities:
Accounts receivable	(13,807		)	(23,859		)
Accounts and notes receivable, affiliate	(762		)	68
Unbilled revenue	(1,376		)	11,538
Fuel, materials and supplies inventory	(15,778		)	40,946
Prepayments	614			1,858
Accounts payable	(20,474		)	(32,826		)
Accounts and notes payable, affiliate	(53		)	(1,386		)
Customer deposits	8,772			9,718
Postretirement benefit obligations	4,323			(58,259		)
Regulatory assets and liabilities, net	(30,532		)	(40,204		)
Other deferred accounts	(20,057		)	(1,996		)
Taxes accrued	23,194			21,680
Interest accrued	9,482			11,075
Energy risk management assets and liabilities, net	(28		)	3,880
Other operating	1,650			1,878
Net cash provided by operating activities	205,527			185,636
Investing activities
Additions to property, plant, and equipment	(173,268		)	(131,962		)
Allowance for other funds used during construction	4,298			3,757
Property, plant, and equipment grants	15,075			1,593
Transfer of cash from restricted accounts	19,102			12,144
Purchase of restricted investments	(4,340		)	—
Other investing	804			664
Net cash used in investing activities	(138,329		)	(113,804		)
Financing activities
Issuance of long-term debt	50,000			—
Retirement of long-term debt	(74,368		)	(12,269		)
Distribution to parent	(58,000		)	(100,000		)
Other financing	(1,710		)	(1,460		)
Net cash used in financing activities	(84,078		)	(113,729		)
Net decrease in cash and cash equivalents	(16,880		)	(41,897		)
Cash and cash equivalents at beginning of period	67,458			184,912
Cash and cash equivalents at end of period	$	50,578		$	143,015
Supplementary cash flow information
Interest paid (net of amount capitalized)	$	48,140		$	52,220
Income taxes (refunded) paid, net	$	(246	)	$	2,233
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	16,141		$	20,088
Non-cash additions to property, plant, and equipment, net	$	18,395		$	6,252
The accompanying notes are an integral part of the condensed consolidated financial statements.

CLECO CORPORATION CLECO POWER 2012 3RD QUARTER FORM 10-Q

Index to Applicable Notes to the Unaudited Condensed Consolidated Financial Statements of Registrants
Note 1	Summary of Significant Accounting Policies	Cleco Corporation and Cleco Power
Note 2	Recent Authoritative Guidance	Cleco Corporation and Cleco Power
Note 3	Regulatory Assets and Liabilities	Cleco Corporation and Cleco Power
Note 4	Fair Value Accounting	Cleco Corporation and Cleco Power
Note 5	Debt	Cleco Corporation and Cleco Power
Note 6	Pension Plan and Employee Benefits	Cleco Corporation and Cleco Power
Note 7	Income Taxes	Cleco Corporation and Cleco Power
Note 8	Disclosures about Segments	Cleco Corporation
Note 9	Electric Customer Credits	Cleco Corporation and Cleco Power
Note 10	Variable Interest Entities	Cleco Corporation and Cleco Power
Note 11	Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees	Cleco Corporation and Cleco Power
Note 12	Affiliate Transactions	Cleco Corporation and Cleco Power
Note 13	Acadia Unit 2 Transaction	Cleco Corporation and Cleco Power
Note 14	Storm Restoration	Cleco Corporation and Cleco Power
Note 15	Subsequent Event	Cleco Corporation and Cleco Power

Notes to the Unaudited Condensed Consolidated Financial Statements

Note 1 — Summary of Significant Accounting Policies

Principles of Consolidation

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

Basis of Presentation

The condensed consolidated financial statements of Cleco Corporation and Cleco Power have been prepared ~~pursuant~~in toaccordance ~~the~~with ~~rules~~GAAP ~~and~~for ~~regulations~~interim offinancial information and with the ~~SEC~~instructions to Form 10-Q and Regulation S-X. Accordingly, ~~certain~~these condensed consolidated financial statements do not include all of the information and ~~note~~notes ~~disclosures~~required ~~normally~~by ~~included~~GAAP infor annual financial statements. Because ~~prepared~~the ininterim ~~accordance~~condensed ~~with~~consolidated financial statements and the accompanying notes do not include all of the information and notes required by GAAP ~~have~~for ~~been~~annual financial statements, the condensed orconsolidated ~~omitted;~~financial ~~however,~~statements ~~Cleco~~and ~~believes~~other ~~that~~information included in this quarterly report should be read in conjunction with the ~~disclosures~~consolidated ~~are~~financial ~~adequate~~statements toand ~~make~~accompanying notes in Cleco’s combined Form 10-K for the ~~information~~year ~~presented~~ended ~~not~~December ~~misleading~~31, 2012.

~~The~~These ~~year-end~~ condensed consolidated ~~balance sheet data was derived from audited~~ financial statements, ~~but does not include all disclosures required by GAAP. The unaudited financial information included~~ in the ~~condensed~~opinion ~~consolidated financial statements~~ of ~~Cleco~~management, ~~Corporation~~reflect ~~and Cleco Power reflects~~ all ~~adjustments of a~~ normal recurring ~~nature~~adjustments ~~which~~that are, in the opinion of ~~the~~ management ~~of Cleco Corporation and Cleco Power~~, necessary ~~for~~to afairly ~~fair~~present ~~statement of~~ the financial position and ~~the~~ results of operations ~~for~~of ~~the interim periods~~Cleco. ~~Information~~Amounts ~~for~~reported ~~interim~~in ~~periods~~Cleco’s isinterim ~~affected~~financial bystatements ~~seasonal~~are ~~variations~~not innecessarily ~~sales,~~indicative ~~rate changes, timing~~ of ~~fuel~~amounts ~~expense~~expected ~~recovery,~~for ~~and~~the ~~other~~annual ~~factors,~~periods ~~and~~due isto ~~not~~the ~~indicative~~effects ~~necessarily~~ of ~~the~~seasonal ~~results~~temperature ~~that~~variations ~~may~~on beenergy ~~expected~~consumption, ~~for~~regulatory rulings, the ~~full~~timing ~~fiscal~~of ~~year. For~~maintenance ~~more information~~ on ~~recent~~electric ~~authoritative~~generating ~~guidance~~units, ~~and~~changes ~~its~~in ~~effect~~mark-to-market ~~on financial results~~valuations, ~~see~~changing ~~Note~~commodity 2prices, —and ~~“Recent~~other ~~Authoritative Guidance~~factors.”

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

disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. For more information on recent authoritative guidance and its effect on financial results, see Note 2 — “Recent Authoritative Guidance.”

Property, Plant, and Equipment

Property, plant, and equipment ~~consist~~consists primarily of regulated utility generation and energy transmission assets. Regulated assets, utilized primarily for retail operations and electric transmission and distribution, are stated at the cost of construction, which includes certain materials, labor, payroll taxes and benefits, administrative and general costs, and the estimated cost of funds used during construction. Jointly owned assets are reflected in property, plant, and equipment at Cleco Power’s share of the cost to construct or purchase the assets. Cleco’s property, plant, and equipment consisted of:

transmission and distribution, are stated at the cost of construction, which includes certain materials, labor, payroll taxes and benefits, administrative and general costs, and the estimated cost of funds used during construction. Jointly owned assets are reflected in property, plant, and equipment at Cleco Power’s share of the cost to construct or purchase the assets. Property, plant, and equipment consisted of:



(THOUSANDS)	AT MAR. 31, 2013			AT DEC. 31, 2012
Regulated utility plants	$	3,917,225		$	3,871,940
Other	268,607			268,254
Total property, plant, and equipment	4,185,832			4,140,194
Accumulated depreciation	(1,332,760		)	(1,311,273		)
Net property, plant, and equipment	$	2,853,072		$	2,828,921

(THOUSANDS)	AT SEPT. 30, 2012			AT DEC. 31, 2011
Regulated utility plants	$	3,815,608		$	3,759,541
Other	267,028			264,114
Total property, plant, and equipment	4,082,636			4,023,655
Accumulated depreciation	(1,291,862		)	(1,230,783		)
Net property, plant, and equipment	$	2,790,774		$	2,792,872

Restricted Cash and Cash Equivalents

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

(THOUSANDS)	AT ~~SEPT~~MAR. 3031, ~~2012~~2013		AT DEC. 31, ~~2011~~2012
Diversified Lands’ mitigation escrow	$	97	$	97
Cleco Katrina/Rita’s storm recovery bonds	3,~~406~~278		8,~~761~~781
Cleco Power’s future storm restoration costs	115,~~510~~691		245,~~876~~343
Cleco Power’s renewable energy grant	—		381
Total restricted cash and cash equivalents	$	9,066	$	14,221
Cleco Power’s NOx allowance escrow	1,713		1,713
Total restricted cash and cash equivalents	$	16,726	$	35,828

Cleco Katrina/Rita has the right to bill and collect storm restoration costs from Cleco Power’s customers. As cash is collected, it is restricted for payment of operating expenses, interest, and principal on storm recovery bonds. During the nine months ended September 30, 2012, Cleco Katrina/Rita collected $14.7 million net of operating expenses. In March and September 2012, Cleco Katrina/Rita used $6.7 million and 20

24CLECO CORPORATION CLECO POWER 2013 1ST QUARTER FORM 10-Q

~~CLECO~~Cleco ~~CORPORATION~~Katrina/Rita ~~CLECO~~has ~~POWER~~the ~~2012~~right ~~3RD~~to ~~QUARTER~~bill ~~FORM~~and ~~10-Q~~collect storm restoration costs from Cleco Power’s customers. As cash is collected, it is restricted for payment of operating expenses, interest, and principal on storm recovery bonds. During the three months ended March 31, 2013, Cleco Katrina/Rita collected $4.9 million net of operating expenses. In March 2013, Cleco Katrina/Rita used $7.1 million for scheduled storm recovery bond principal payments and $3.3 million for related interest.

$6.4 million, respectively for scheduled storm recovery bond principal payments and $3.6 million and $3.4 million, respectively for related interest. Cleco Power's restricted cash and cash equivalents held for future storm restoration costs decreased $13.4 million from December 31, 2011, primarily due to the transfer of $4.5 million to restricted investments and the transfer of $10.0 million to cover expenses associated with Hurricane Isaac. These amounts were partially offset by $1.1 million of storm surcredits. For more information about these restricted investments, see Note 4 — "Fair Value Accounting — Restricted Investments" and for more information about Hurricane Isaac, see Note 14 — "Storm Restoration."

Fair Value Measurements and Disclosures

Various accounting pronouncements require certain assets and liabilities to be measured at their fair values. Some assets and liabilities are required to be measured at their fair value each reporting period, while others are required to be measured only one time, generally the date of acquisition or debt issuance. Cleco and Cleco Power are required to disclose the fair value of certain assets and liabilities by one of three levels when required for recognition purposes under GAAP. Other financial assets and liabilities, such as long-term debt, are reported at their carrying values at their date of issuance on the condensed consolidated balance sheets with their fair values as of the balance sheet date disclosed within the three levels. For more information about fair value levels, see Note 4 — “Fair Value Accounting.”

Risk Management

Market risk inherent in Cleco Power’s market risk-sensitive instruments and positions includes potential changes arising from changes in interest rates and the commodity market prices of power and natural gas on different energy exchanges. Cleco’s Energy Market Risk Management Policy authorizes the use of various derivative instruments, including exchange traded futures and option contracts, forward purchase and sales contracts, and swap transactions to reduce exposure to fluctuations in the price of power and natural gas. Cleco applies the authoritative guidance as it relates to derivatives and hedging to determine whether the market risk-sensitive instruments and positions are required to be marked-to-market. Generally, Cleco Power’s market risk-sensitive instruments and positions qualify for the normal-purchase, normal-sale exception to mark-to-market accounting because Cleco Power takes physical delivery and the instruments and positions are used to satisfy customer requirements.

Cleco Power may enter into positions to mitigate the volatility in customer fuel costs. These positions are marked-to-market with the resulting gain or loss recorded on the balance sheet as a component of energy risk management assets or liabilities. Such gain or loss is deferred as a component of deferred fuel assets or liabilities in accordance with regulatory policy. When these positions close, actual gains or losses will be included in the ~~fuel~~FAC ~~adjustment clause~~ and reflected on customers’ bills as a component of the fuel cost adjustment.

Cleco Power maintains margin accounts with commodity brokers used to partially fund the acquisition of natural gas futures, options, and swap contracts. These contracts/positions are used to mitigate the risks associated with the volatility in customer fuel costs noted above. The current and long-term portions of collateral are reported as a component of energy risk management assets or liabilities and other deferred credits, respectively.

Cleco and Cleco Power maintain a master netting agreement policy and monitor credit risk exposure through review of counterparty credit quality, counterparty credit exposure, and counterparty concentration levels. Cleco manages these risks by establishing appropriate credit and concentration limits on transactions with counterparties and by requiring contractual guarantees, cash deposits, or letters of credit from counterparties or their affiliates, as deemed necessary. Cleco Power has agreements in place with various counterparties that authorize the netting of financial buys and sells and contract payments to mitigate credit risk for transactions entered into for risk management purposes.

Cleco has entered into various contracts to mitigate the volatility in interest rate risk. These contracts include, but are not limited to, interest rate swaps and treasury rate locks. For these contracts in which Cleco is hedging the variability of cash flows related to forecasted transactions that qualify as cash flow hedges, the changes in the fair value of such derivative instruments are reported in other comprehensive income. To qualify for hedge accounting, the relationship between the hedging instrument and the hedged item must be documented to include the risk management objective and strategy, and, at inception and on an ongoing basis, the effectiveness of the hedge in offsetting the changes in the cash flows of the item being hedged. Gains or losses accumulated in other comprehensive income are reclassified as earnings in the periods in which earnings are affected by the variability of the cash flows of the hedged item. The ineffective portions of hedges will be recognized in current period earnings unless management determines that it is probable that the costs will be recovered through the rate-making process. If management determines that it is probable that the costs will be recovered, then they will be recognized as a regulatory asset or liability and amortized to earnings over the life of the related debt. For those contracts in which Cleco is hedging the variability of cash flows related to forecasted transactions that do not qualify as cash flow hedges, the changes in the fair value of such derivative instruments will be recognized in current period earnings unless management determines that it is probable that the costs will be recovered through the rate-making process. If management determines that it is probable that the costs will be recovered, then such costs will be recognized as a regulatory asset or liability and amortized to earnings over the life of the related debt. For more information on the interest rate risk contracts, see Note 4 — “Fair Value Accounting — Interest Rate Derivatives.”

not limited to, interest rate swaps and treasury rate locks. For these contracts in which Cleco is hedging the variability of cash flows related to forecasted transactions that qualify as cash flow hedges, the changes in the fair value of such derivative instruments are reported in other comprehensive income. To qualify for hedge accounting, the relationship between the hedging instrument and the hedged item must be documented to include the risk management objective and strategy, and, at inception and on an ongoing basis, the effectiveness of the hedge in offsetting the changes in the cash flows of the item being hedged. Gains or losses accumulated in other comprehensive income are reclassified as earnings in the periods in which earnings are affected by the variability of the cash flows of the hedged item. The ineffective portions of hedges will be recognized in current period earnings unless management determines that it is probable that the costs will be recovered through the rate-making process. If management determines that it is probable that the costs will be recovered from customers, then they will be recognized as a regulatory asset or liability and amortized to earnings over the life of the related debt. For those contracts in which Cleco is hedging the variability of cash flows related to forecasted transactions that do not qualify as cash flow hedges, the changes in the fair value of such derivative instruments will be recognized in current period earnings unless management determines that it is probable that the costs will be recovered from customers through the rate-making process. If management determines that it is probable that the costs will be recovered from customers, then they will be recognized as a regulatory asset or liability and amortized to earnings over the life of the related debt. For more information on the interest rate risk contracts, see Note 4 — “Fair Value Accounting — Interest Rate Derivatives.”

Reclassifications

Certain reclassifications have been made to the ~~2011~~2012 financial statements to conform them to the presentation used in the ~~2012~~2013 financial statements. These reclassifications had no effect on Cleco Corporation’s net income applicable to common stock or total common shareholders’ equity or Cleco Power’s net income or total member’s equity.

During the second quarter of 2012, the Registrants began presenting the LPSC allowable portion of the amortization of the plant acquisition adjustment related to Acadia Unit 1 as depreciation expense on the Registrants’ Condensed Consolidated Statements of Income. Previously, this amortization was presented as other expense. The Registrants have reclassified prior year amounts to conform to this presentation. This change increased depreciation and decreased other expenses by $0.7 million ~~and $2.1 million~~ for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2011, respectively~~2012.

CLECO CORPORATION CLECO POWER 2012 3RD QUARTER FORM 10-Q

Also during the second quarter of 2012, the Registrants determined that an error existed in the statement of cash flows presentation of contributions received in aid of construction, specifically the impact that the accounting for these contributions had on the presentation of cash flows related to the additions of property, plant, and equipment. This caused errors between the operating activities section and investing activities section for prior periods.

Cleco and Cleco Power’s Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended March 31, 2012, have been adjusted to correct the presentation of cash flows related to additions to property, plant, and equipment. These corrections had no impact on the

September 30, 2011, have been adjusted to correct the presentation of cash flows related to additions to property, plant, and equipment. These corrections had no impact on the Registrants’ cash and cash equivalents, financial condition, or results of operations. Management believes that these corrections did not have a material effect on the Registrants’ Condensed Consolidated Statements of Cash Flows. The corrections to the September 30, 2011 Condensed Consolidated Statements of Cash Flows are presented in the following table:21

				CLECO						CLECO POWER
	FOR THE NINE MONTHS ENDED SEPT. 30, 2011
(THOUSANDS)	AS REPORTED			AS ADJUSTED			AS REPORTED			AS ADJUSTED
Accounts receivable	$	(18,274	)	$	(21,691	)	$	(20,442	)	$	(23,859	)
Other deferred accounts	$	(2,184	)	$	2,181		$	(6,361	)	$	(1,996	)
Net cash provided by operating activities	$	262,642		$	263,590		$	184,688		$	185,636
Additions to property, plant, and equipment	$	(145,669	)	$	(146,617	)	$	(131,014	)	$	(131,962	)
Net cash used in investing activities	$	(54,097	)	$	(55,045	)	$	(112,856	)	$	(113,804	)
Net decrease in cash and cash equivalents	$	(32,896	)	$	(32,896	)	$	(41,897	)	$	(41,897	)
Cash and cash equivalents at the beginning of the period	$	191,128		$	191,128		$	184,912		$	184,912
Cash and cash equivalents at the end of the period	$	158,232		$	158,232		$	143,015		$	143,015



CLECO CORPORATION
CLECO POWER		2013 1ST QUARTER FORM 10-Q

Registrants’ cash and cash equivalents, financial condition, or results of operations. Management believes that these corrections did not have a material effect on the Registrants’

Condensed Consolidated Statements of Cash Flows. The corrections to the March 31, 2012 Condensed Consolidated Statements of Cash Flows are presented in the following table:



				CLECO						CLECO POWER
	FOR THE THREE MONTHS ENDED MAR. 31, 2012
(THOUSANDS)	AS REPORTED			AS ADJUSTED			AS REPORTED			AS ADJUSTED
Accounts receivable	$	6,253		$	7,812	*	$	5,767		$	7,326	*
Other deferred accounts	$	(5,835	)	$	(1,883	)*	$	(8,747	)	$	(4,795	)*
Net cash provided by operating activities	$	41,373		$	45,719	*	$	47,513		$	51,667	*
Additions to property, plant, and equipment	$	(39,380	)	$	(43,487	)*	$	(38,507	)	$	(42,661	)*
Net cash used in investing activities	$	(40,825	)	$	(44,932	)*	$	(30,759	)	$	(34,913	)*
Net decrease in cash and cash equivalents	$	(46,327	)	$	(46,327	)	$	(31,573	)	$	(31,573	)
Cash and cash equivalents at the beginning of the period	$	93,576		$	93,576		$	67,458		$	67,458
Cash and cash equivalents at the end of the period	$	47,249		$	47,249		$	35,885		$	35,885
*These amounts have been revised from the amounts reported in the Registrants’ Combined Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012 to conform to the presentation in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

Earnings per Average Common Share

The following tables show the calculation of basic and diluted earnings per share:

FOR THE THREE MONTHS ENDED SEPT. 30,

FOR THE THREE MONTHS ENDED MAR. 31,

2012

2011

2013

2012

(THOUSANDS, EXCEPT SHARES AND PER SHARE AMOUNTS)

INCOME

PER SHAREAMOUNT

INCOME

PER SHAREAMOUNT

Basic net income applicable to common stock

6327,~~818~~133

60,~~346~~399,~~476~~697

10.0645

6530,~~842~~031

60,~~467~~372,~~595~~567

10.0950

Effect of dilutive securities

Add: stock option grants

~~1,536~~—

2013,~~441~~097

Add: restricted stock (LTICP)

~~251~~267,~~191~~704

~~385~~213,~~275~~311

Diluted net income applicable to common stock

6327,~~818~~133

60,~~599~~667,~~203~~401

10.0545

6530,~~842~~031

60,~~873~~598,~~311~~975

10.0850

						FOR THE NINE MONTHS ENDED SEPT. 30,
				2012					2011
(THOUSANDS, EXCEPT SHARES AND PER SHARE AMOUNTS)	INCOME		SHARES	PER SHAREAMOUNT		INCOME		SHARES	PER SHAREAMOUNT
Net income	$	140,536				$	165,205
Deduct: non-participating stock dividends (4.5% preferred stock)	—					26
Deduct: non-participating stock redemption costs (4.5% preferred stock)	—					112
Basic net income applicable to common stock	$	140,536	60,375,538	$	2.33	$	165,067	60,549,860	$	2.73
Effect of dilutive securities
Add: stock option grants			4,518					20,965
Add: restricted stock (LTICP)			246,415					259,426
Diluted net income applicable to common stock	$	140,536	60,626,471	$	2.32	$	165,067	60,830,251	$	2.71

Stock option grants are excluded from the computation of diluted earnings per share if the exercise price is higher than the average market price. There were no stock option grants excluded from the computation of diluted earnings per share for the three months ended March 31, 2012, due to the average market price being higher than the exercise prices of the stock options. All stock options were exercised during 2012 and no additional options were granted during the three months ended March 31, 2013.

Stock option grants are excluded from the computation of diluted earnings per share if the exercise price is higher than the average market price. There were no stock option grants excluded from the computation of diluted earnings per share for the three and nine months ended September 30, 2012 and 2011, due to the average market price being higher than the exercise prices of the stock options.

Stock-Based Compensation

At ~~September~~March 3031, ~~2012~~2013, Cleco had two stock-based compensation plans, the ESPP and the LTICP. Substantially all employees, excluding officers and general managers, may choose to participate in the ESPP and purchase a limited amount of common stock at a discount through a stock option agreement. Options or restricted shares of stock, known as non-vested stock as defined by the authoritative guidance on stock-based compensation, common stock equivalents, and stock appreciation rights may be granted to certain officers, key employees, or directors of Cleco Corporation and its subsidiaries pursuant to the LTICP.

26During the first quarter of 2013, Cleco granted 139,048 shares of non-vested stock to certain officers, key employees, and directors of Cleco Corporation and its subsidiaries pursuant to the LTICP.

CLECO CORPORATION CLECO POWER 2012 3RD QUARTER FORM 10-Q

subsidiaries pursuant to the LTICP.

During the first quarter of 2012, Cleco granted 140,186 shares of non-vested stock to certain officers, key employees, and directors of Cleco Corporation and its subsidiaries

pursuant to the LTICP.

Cleco and Cleco Power reported pre-tax compensation expense for their share-based compensation plans as shown in the following table:

	CLECO CORPORATION				CLECO POWER				~~CLECO CORPORATION~~				~~CLECO POWER~~
	FOR THE THREE MONTHS ENDED SEPT. 30,								FOR THE NINE MONTHS ENDED SEPT. 30,
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	~~2012~~2013		~~2011~~2012		~~2012~~2013		~~2011~~2012		~~2012~~		~~2011~~		~~2012~~		~~2011~~
Equity classification
Non-vested stock	$	1,~~139~~428	$	1,~~095~~055	$	~~301~~331	$	~~225~~214	$	~~3,271~~	$	~~3,042~~	$	~~792~~	$	~~748~~
Stock options	2—		695		—		—		11		~~105~~		—		—
Total equity classification	$	1,~~141~~428	$	1,~~164~~060	$	~~301~~331	$	~~225~~214	$	~~3,282~~	$	~~3,147~~	$	~~792~~	$	~~748~~
Liability classification
Common stock equivalent units	$	~~847~~1	$	~~1,024~~188	$	~~338~~—	$	~~435~~83	$	~~1,552~~	$	~~2,583~~	$	~~631~~	$	~~1,020~~
Total pre-tax compensation expense	$	1,~~988~~429	$	21,~~188~~248	$	~~639~~331	$	~~660~~297	$	~~4,834~~	$	~~5,730~~	$	~~1,423~~	$	~~1,768~~
Tax benefit	$	~~765~~550	$	~~842~~480	$	~~246~~127	$	~~254~~114	$	~~1,860~~	$	~~2,205~~	$	~~548~~	$	~~680~~

Note 2 — Recent Authoritative Guidance

The Registrants adopted, or will adopt, the recent authoritative guidance listed below on their respective effective dates.

In ~~April~~July ~~2011~~2012, FASB issued guidance toon ~~improve~~testing ~~the~~indefinite-lived ~~accounting~~intangible assets for ~~repurchase~~impairment. This ~~agreements~~guidance is intended to reduce costs and ~~other~~complexity ~~similar~~of ~~agreements. Specifically,~~testing ~~this~~indefinite-lived ~~guidance~~intangible ~~modifies~~assets ~~the~~other ~~criteria~~than goodwill for ~~determining~~impairment. Entities ~~when~~are ~~these~~allowed ~~transactions~~to ~~would~~perform bea ~~accounted~~“qualitative” ~~for~~assessment asto ~~financings~~determine aswhether ~~opposed~~further toimpairment ~~sales~~testing orof ~~purchases~~indefinite-lived ~~with~~intangible ~~commitments~~assets is necessary, similar in approach to ~~repurchase~~the orgoodwill ~~resale~~impairment test. The adoption of this guidance ~~was~~is effective for ~~the~~annual ~~first~~and ~~period~~interim ~~beginning~~impairment ontests orperformed for fiscal years beginning after ~~December~~September 15, ~~2011~~2012. The adoption of this guidance did not have aany ~~material~~ impact on the financial condition or results of operations of the Registrants.

In May 2011, FASB issued guidance on fair value measurements. This guidance results in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between GAAP and International Financial Reporting Standards. The adoption of this guidance is effective prospectively for interim and annual periods beginning after December 15, 2011. The adoption of this guidance did not have a material impact on the financial condition or results of operations of the Registrants.22

InCLECO ~~December~~CORPORATION ~~2011,~~CLECO ~~FASB~~POWER revised the disclosure requirements related to balance sheet offsetting. After the effective date, entities must disclose both the gross and net information about instruments and transactions eligible for offsetting on the balance sheet, including transactions under master netting agreements. The adoption of this revision is required for interim and annual periods beginning on or after January 1, 2013~~. The~~ ~~adoption~~1ST ofQUARTER ~~this~~FORM ~~revision will not have any effect on the financial condition or results of operations of the Registrants since it relates to disclosures.~~10-Q

In ~~July~~February ~~2012~~2013, FASB ~~issued~~clarified ~~guidance~~the onscope ~~testing~~of ~~indefinite-lived~~revised ~~intangible~~disclosure ~~assets~~requirements ~~for~~related ~~impairment. This guidance is intended~~ to ~~reduce~~balance ~~costs~~sheet ~~and~~offsetting ~~complexity~~that ofwas ~~testing~~issued ~~indefinite-lived~~in ~~intangible~~December ~~assets other than goodwill for impairment~~2011. ~~Entities~~The ~~are~~amendment ~~allowed~~clarifies tothat ~~perform~~the ascope ~~“qualitative”~~applies ~~assessment~~ to ~~determine~~derivatives ~~whether~~accounted ~~further~~for ~~impairment~~in ~~testing~~accordance ofwith ~~indefinite-lived~~the ~~intangible~~authoritative ~~assets~~guidance isfor ~~necessary,~~derivatives ~~similar~~and ~~in approach to the goodwill impairment test~~hedging. The adoption of this ~~guidance~~revision is ~~effective~~required for ~~annual~~interim and ~~interim~~annual ~~impairment~~periods ~~tests~~beginning ~~performed~~on ~~for~~or ~~fiscal years beginning~~ after ~~September~~January 151, ~~2012~~2013. The adoption of this ~~guidance~~revision ~~will~~did not have any impact on the financial condition or results of operations of the Registrants because it relates to disclosures, and no additional disclosures were required.

In February 2013, FASB revised the disclosure requirements related to items reclassified out of accumulated other comprehensive income. This guidance is intended to improve the transparency of changes in OCI. This revision is effective for fiscal years, and interim periods within those years, beginning after December 15, 2012. Cleco adopted the revisions to this amendment during the first quarter of 2013. The adoption of this revision did not have any impact on the financial condition or results of operations of the Registrants because it relates to disclosures. For more information on items reclassified out of accumulated other comprehensive income, see Note 14 — “Accumulated Other Comprehensive Loss.”

In March 2013, FASB issued guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date. The adoption of this guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this guidance is not expected to have a material impact on the financial condition or results of operations of the Registrants.

Note 3 — Regulatory Assets and Liabilities

(THOUSANDS)	AT SEPT. 30, 2012			AT DEC. 31, 2011
Regulatory assets – deferred taxes, net	$	219,433		$	214,421
Mining costs	$	17,206		$	19,117
Interest costs	6,394			6,667
Asset removal costs	851			829
Postretirement plan costs	126,349			132,556
Tree trimming costs	6,335			8,371
Training costs	7,369			7,486
Storm surcredits, net	5,958			9,254
Construction carrying costs	6,262			10,883
Lignite mining agreement contingency	3,781			3,781
Power purchase agreement capacity costs	5,921			—
AFUDC equity gross-up	73,906			74,346
Rate case costs	716			1,117
Acadia Unit 1 acquisition costs	2,892			2,971
IRP/RFP costs	156			508
AMI pilot costs	54			153
Financing costs	6,851			4,433
Biomass costs	153			—
Total regulatory assets – other	$	271,154		$	282,472
Construction carrying costs	(8,251		)	(40,322		)
Fuel and purchased power	1,715			2,136
Total regulatory assets, net	$	484,051		$	458,707

Cleco Power follows the authoritative guidance on regulated operations, which allows utilities to capitalize or defer certain costs based on regulatory approval and management’s ongoing assessment that it is probable these items will be recovered through the ratemaking process. The following table summarizes Cleco Power’s regulatory assets and liabilities at March 31, 2013 and December 31, 2012:

Power Purchase Agreement Capacity Costs



(THOUSANDS)	AT MAR. 31, 2013			AT DEC. 31, 2012
Regulatory assets – deferred taxes, net	$	211,617		$	210,445
Mining costs	$	15,931		$	16,569
Interest costs	6,213			6,304
Asset removal costs	884			867
Postretirement plan costs	153,103			156,458
Tree trimming costs	4,978			5,656
Training costs	7,291			7,330
Storm surcredits, net	6,931			6,211
Construction carrying costs	3,131			4,697
Lignite mining agreement contingency	3,781			3,781
Power purchase agreement capacity costs	7,219			6,217
AMI deferred revenue requirement	2,141			1,483
AFUDC equity gross-up	74,145			74,158
Rate case costs	447			581
Acadia Unit 1 acquisition costs	2,839			2,865
IRP/RFP costs	—			39
AMI pilot costs	—			22
Financing costs	7,186			7,282
Biomass costs	137			145
Total regulatory assets – other	$	296,357		$	300,665
Construction carrying costs	(3,296		)	(8,255		)
Fuel and purchased power	3,981			7,833
Total regulatory assets, net	$	508,659		$	510,688

InTree ~~March~~Trimming 2012, Cleco Power received approval from the LPSC for a three-year power purchase agreement with Evangeline providing 730 MW of capacity and energy beginning May 1, 2012, and ending April 30, 2015. The LPSC order allows Cleco Power to defer and recover a portion of capacity costs associated with the power purchase agreement. The deferred costs will be collected over the term of the contract.Costs

~~Financing~~In ~~Costs~~January 2008, the LPSC approved Cleco Power’s request to establish a regulatory asset for costs incurred to trim, cut, or remove trees that were damaged by hurricanes Katrina and Rita, but were not addressed as part of the restoration efforts. The regulatory asset was capped at $12.0 million in actual expenditures plus a 12.4% grossed-up rate of return. Recovery of these expenditures was requested in Cleco Power’s base rate application filed in July 2008 and was approved by the LPSC in October 2009. In February 2010, Cleco Power began amortizing the regulatory asset over a five-year period.

InOn ~~2011~~January 29, 2013, Cleco Power ~~entered~~requested ~~into~~to expend and ~~settled~~defer ~~two~~up ~~treasury~~to ~~rate locks. Of the~~ $~~26.~~8.0 million in ~~settlements,~~additional $6tree management costs.9 Cleco ~~million~~Power ~~was~~requested ~~recorded~~similar accounting treatment as authorized in the initial tree extraction request and requested authorization to accrue actual expenditures to a regulatory asset ~~relating~~through tothe ~~ineffectiveness~~completion date of the tree extraction effort. Cleco Power anticipates a completion date of December 31, 2014 for this phase of the tree extraction project. The LPSC approved this request on April 4, 2013.

CLECO CORPORATION CLECO POWER 2012 3RD QUARTER FORM 10-Q

hedge relationship. As a result of management’s assessment that it is probable that the ineffectiveness will be recovered through the rate-making process, Cleco Power will amortize the regulatory asset over the 30-year term of the related debt issuance.

Biomass Test Burn Costs

In November 2011, the LPSC approved Cleco Power’s request to establish a regulatory asset for the non-fuel, non-capital portion of costs incurred to conduct a test burn of biomass fuel at Madison Unit 3. These costs will be amortized over a five-year period.

Construction Carrying Costs

In February 2006, the LPSC approved Cleco Power’s plans to build Madison Unit 3. Terms of the approval included authorization for Cleco Power to collect from customers ana ~~amount equal to 75% of the LPSC-jurisdictional~~ portion of the carrying costs of capital during the construction phase of the unit. Cleco Power’s retail rate plan, ~~which was approved in October 2009,~~ established that Cleco Power return carrying costs to customers and record a regulatory asset for all carrying costs incurred by Cleco Power above the actual amount collected from customers. These costs are being amortized over a four-year period. As of March 31, 2013, Cleco Power had returned $163.1 million to customers. At March 31, 2013, $3.3 million is due to be returned to customers within one year.

amount collected from customers. On February 12, 2010, Madison Unit 3 commenced commercial operations and Cleco Power began returning the construction carrying costs to customers. These costs are being amortized over a four-year period. As of September 30, 2012, Cleco Power had returned $158.2 million to customers. At September 30, 2012, $8.3 million was due to be returned to customers within one year. 23



CLECO CORPORATION
CLECO POWER		2013 1ST QUARTER FORM 10-Q

Power Purchase Agreement Capacity Costs

In March 2012, Cleco Power received approval from the LPSC for a three-year power purchase agreement with Evangeline providing 730 MW of capacity and energy beginning May 1, 2012, and ending April 30, 2015. The LPSC order allows Cleco Power to defer and recover a portion of capacity costs associated with the power purchase agreement. The deferred costs are being collected over the term of the contract.

AMI Deferred Revenue Requirement

In February 2011, the LPSC approved Cleco Power’s stipulated settlement in Docket No. U-31393 allowing Cleco Power to defer, as a regulatory asset, the estimated revenue requirements for the AMI project. The amount of the regulatory asset, including carrying charges, is capped by the LPSC at $20.0 million. The regulatory asset will amortize by the end of the economic life of the project, currently estimated at 15 years.

Fuel and Purchased Power Costs

The cost of fuel used for electric generation and the cost of power purchased for utility customers are recovered through the LPSC-established FAC, which enables Cleco Power to

pass on to its customers substantially all such charges. For the three months ended March 31, 2013, approximately 88% of Cleco Power’s total fuel cost was regulated by the LPSC, while the remainder was regulated by FERC.

The $3.9 million decrease in the under-recovered costs was primarily due to a decrease in fuel and purchased power costs.

Note 4 — Fair Value Accounting

The amounts reflected in Cleco and Cleco Power’s Condensed Consolidated Balance Sheets at ~~September~~March 3031, ~~2012~~2013 and December 31, ~~2011~~2012, for cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, other accounts receivable, accounts payable, and short-term debt approximate fair value because of their short-term nature. Estimates of the fair value of Cleco and Cleco Power’s long-term debt are based upon the quoted market price for the same or similar issues or by a discounted present value analysis of future cash flows using current rates obtained by Cleco and Cleco Power for debt with similar maturities. ~~The following tables summarize the carrying value and estimated market value of Cleco and Cleco Power’s financial instruments subject to fair value accounting.~~

Cleco
	AT SEPT. 30, 2012				AT DEC. 31, 2011
(THOUSANDS)	CARRYINGVALUE		ESTIMATEDFAIR VALUE		CARRYINGVALUE		ESTIMATEDFAIR VALUE
Financial instruments not marked-to-market
Cash and cash equivalents	$	68,364	$	68,364	$	93,576	$	93,576
Restricted cash and cash equivalents	$	16,726	$	16,726	$	35,828	$	35,828
Long-term debt, excluding debt issuance costs	$	1,320,198	$	1,553,694	$	1,354,567	$	1,542,867

The following tables summarize the carrying value and estimated market value of Cleco and Cleco Power’s financial instruments subject to fair value accounting.

Cleco Power

Cleco

AT SEPT. 30, 2012

AT DEC. 31, 2011

AT MAR. 31, 2013

AT DEC. 31, 2012

(THOUSANDS)

CARRYINGVALUE

ESTIMATEDFAIR VALUE

CARRYINGVALUE

ESTIMATEDFAIR VALUE

Financial instruments not marked-to-market

Financial instruments not marked-to-market:

Cash and cash equivalents

5046,~~578~~467

6731,~~458~~020

Restricted cash and cash equivalents

169,~~629~~066

3514,~~731~~221

Long-term debt, excluding debt issuance costs

1,~~320~~328,~~198~~069

1,~~553~~534,~~694~~758

1,~~344~~345,~~567~~198

1,~~532~~579,~~867~~674

At September 30, 2012, Cleco and Cleco Power were exposed to concentrations of credit risk through their short-term investments classified as cash equivalents and restricted cash equivalents. Cleco had $74.7 million ($58.5 million of cash equivalents and $16.2 million of restricted cash equivalents) in short-term investments in institutional money market funds. Cleco Power had $61.1 million ($45.0 million of cash equivalents and $16.1 million of restricted cash equivalents) in short-term investments in institutional money market funds. If the money market funds failed to perform under the terms of the investments, Cleco and Cleco Power would be exposed to a loss of the invested amounts. Collateral on these types of investments is not required by either Cleco or Cleco Power.



Cleco Power
	AT MAR. 31, 2013				AT DEC. 31, 2012
(THOUSANDS)	CARRYING VALUE		ESTIMATED FAIR VALUE		CARRYING VALUE		ESTIMATED FAIR VALUE
Financial instruments not marked-to-market:
Cash and cash equivalents	$	42,439	$	42,439	$	23,368	$	23,368
Restricted cash and cash equivalents	$	8,969	$	8,969	$	14,124	$	14,124
Long-term debt, excluding debt issuance costs	$	1,313,069	$	1,519,758	$	1,320,198	$	1,554,674

InAt ~~May~~March 31, ~~2012~~2013, Cleco and Cleco Power ~~revised~~were exposed to concentrations of credit risk through their ~~guidelines~~short-term ~~for~~investments classified as cash equivalents and restricted cash equivalents. Cleco had $48.5 million ($39.6 million of cash equivalents and $8.9 million of restricted cash equivalents) in short-term investments in ~~order~~institutional money market funds. Cleco Power had $46.4 million ($37.6 million of cash equivalents and $8.8 million of restricted cash equivalents) in short-term investments in institutional money market funds. If the money market funds failed to ~~mitigate~~perform ~~credit~~under ~~risk~~the terms of the investments, Cleco and Cleco Power would be exposed to a loss of the invested amounts. ~~Qualifying~~Collateral on these types of investments ~~include:~~is not required by either Cleco or Cleco Power.

• U.S. treasury securities,

• U.S. federal agency and U.S. government-sponsored entity debt,

• Tax-exempt short-term securities of a state, territory,

or a possession of the U.S.,

• Certificates of deposit, banker's acceptances and time deposits,

• Corporate notes and bonds, fixed or floating rate, and covered bonds,

• Commercial paper,

• Asset backed securities with a minimum long-term rating of AA by Standard & Poor's and Aaa by Moody's,

• U.S. government mortgage securities with a short average life with a minimum long-term rating of AA by Standard & Poor's and Aaa by Moody's,

• Repurchase agreements with the primary government securities dealers or financial institutions in which Cleco deposits and/or concentrates cash, and

• Money market funds which must have at least $15.0 billion in assets under management; must have been in existence for not less than two years; must have a minimum rating of AAA by Standard & Poor's and Aaa by Moody's and must be compliant with the SEC rule 2a-7 which restricts the quality, maturity, and diversity of investments by money market funds.

CLECO CORPORATION CLECO POWER 2012 3RD QUARTER FORM 10-Q

The minimum acceptable short-term credit rating must be A-1 by Standard & Poor's and P-1 by Moody's. The maximum maturity of any instrument must be 36 months, and the maximum portfolio duration must be 12 months.

Diversification of holdings must be stressed recognizing the total amount of the portfolio. Investments in securities of any one issuer will be limited to 5% at the time of purchase except for U.S. Treasury and Agency Securities and money market funds. No more than 50% of the portfolio at the time of purchase will be invested in any single Federal Agency/Government Sponsored Enterprise.

Restricted Investments

In September 2007, the LPSC authorized the funding and securitization of a $50.0 million reserve for Cleco Power'’s future storm costs. On July 1, 2012, Cleco Power transferred $13.0 million of the related restricted cash and cash equivalents to an outside investment manager. Investments made by the investment manager are restricted to the criteria established by management in Cleco Power'’s guidelines for short-term ~~investments. At September 30, 2012, the investments included institutional money market funds and municipal bonds.~~

~~The institutional money market fund~~ investments. At ~~are reflected in Cleco and Cleco Power's Condensed Consolidated Balance Sheets at September~~March 3031, ~~2012~~2013, asthe ~~restricted~~investments included cash and cash equivalents and ~~approximate~~debt ~~fair value because of their short-term nature~~securities.

The ~~municipal~~cash ~~bonds~~and ~~were~~cash ~~recorded~~equivalents atare ~~fair~~reflected ~~value~~in on Cleco and Cleco Power'’s Condensed Consolidated Balance Sheets at ~~September~~March 3031, ~~2012~~2013, as restricted ~~investments. The~~cash ~~investments in municipal bonds are classified as available-for-sale securities~~ and ~~are~~cash ~~marked-to-market~~equivalents ~~at least quarterly. Because Cleco Power's investment strategy for these investments fits within the requirements established by the LPSC for the restricted reserve fund, realized~~ and ~~unrealized~~approximate ~~gains~~fair ~~and~~value ~~losses,~~because ~~interest~~of ~~income,~~their ~~investment~~short-term ~~management fees and custody fees are recorded directly to Cleco Power's restricted storm reserve rather than in earnings or other comprehensive income~~nature. ~~As a result no amounts will be recorded to other comprehensive income for these investments.~~

~~Quarterly,~~The debt securities were recorded at fair value on Cleco and Cleco Power'’s Condensed Consolidated Balance Sheets at March 31, 2013, as restricted investments. The investments in debt securities include municipal bonds and commercial paper with original maturity dates of more than three months and are classified as available-for-sale, ~~debt~~ securities and are ~~evaluated~~reported onat anfair ~~individual~~value. Because ~~basis~~Cleco Power’s investment strategy for these investments is within the requirements established by the LPSC for the restricted reserve fund, realized and unrealized gains and losses, interest income, investment management fees, and custody fees are recorded directly to ~~determine~~Cleco ifPower’s restricted storm reserve rather than in earnings or other comprehensive income. As a ~~decline~~result, no amounts will be recorded to other comprehensive income for these investments.

in fair value below the carrying value is other-than-temporary. Management determines whether it intends to sell or if it is more likely than not that it will be required to sell impaired securities. This determination considers current and forecasted liquidity and regulatory requirements. For Cleco Power's impaired debt securities for which there was no intent or expected requirement to sell, the evaluation assesses whether it is likely the amortized cost will be recovered considering the nature of the securities, credit rating, financial condition of the issuer or the extent and duration of the unrealized loss and market conditions. If Cleco Power determined that an other-than-temporary decline in value existed on its municipal bonds, the investments would be written down to fair value with a new cost basis established. Declines in fair value below cost basis that are determined to be other-than-temporary would be recorded to Cleco Power's restricted storm reserve. The unrealized losses on Cleco Power's municipal bonds as of September 30, 2012, were caused by interest rate movements. Cleco Power does not intend to sell the municipal bonds and has determined it is more likely than not that it will not be required to sell the investments before recovery of the amortized cost value. Cleco Power determined there were no material other-than-temporary impairments on its municipal bonds at September 30, 2012. 24

~~The~~CLECO ~~following~~CORPORATION ~~table~~CLECO ~~provides~~POWER a2013 ~~reconciliation~~1ST ofQUARTER ~~Cleco~~FORM ~~Power's available~~10-~~for-sale securities from cost basis to fair value at September 30, 2012.~~Q

	AT SEPT. 30, 2012
(THOUSANDS)	AMORTIZEDCOST		TOTALUNREALIZED GAINS (1)		TOTALUNREALIZEDLOSSES (1)		FAIR VALUE
Municipal bonds	$	4,477	$	2	$	9	$	4,470
(1) Unrealized gains and losses are recorded to the restricted storm reserve.

Quarterly, Cleco Power’s available-for-sale debt securities are evaluated on an individual basis to determine if a decline in fair value below the carrying value is other-than-temporary.

~~Cleco~~Management ~~Power~~determines ~~recognized~~whether ~~less~~it intends to sell or if it is more likely than $0not that it will be required to sell impaired securities.1 ~~million~~This ofdetermination ~~unrealized~~considers ~~mark-~~current and forecasted liquidity and regulatory requirements. For Cleco Power’s impaired debt securities for which there was no intent or expected requirement to~~-market~~ ~~losses~~sell, inthe evaluation assesses whether it is likely the ~~restricted~~amortized ~~storm~~cost ~~reserve~~will ~~for~~be ~~both~~recovered considering the ~~three~~nature ~~and~~of ~~nine~~the ~~months~~securities, ~~ended~~credit ~~September 30~~rating, ~~2012. The~~financial ~~following~~condition ~~table~~of ~~summarizes~~the issuer, or the ~~securities~~extent ~~that~~and ~~were~~duration inof anthe unrealized loss ~~position~~and atmarket ~~September 30,~~conditions. If ~~2012,~~Cleco ~~but~~Power ~~for~~determines ~~which~~that noan other-than-temporary ~~impairment~~decline ~~was~~in ~~recognized:~~value exists on its debt securities, the investments would be written down

			LESS THAN 12 MONTHS		12 MONTHS OR LONGER
(THOUSANDS)	AGGREGATE UNREALIZED LOSS		AGGREGATE RELATEDFAIR VALUE		AGGREGATE UNREALIZED LOSS		AGGREGATE RELATEDFAIR VALUE
Municipal bonds	$	9	$	3,381	$	—	$	—

to fair value with a new cost basis established. Declines in fair value below cost basis that are determined to be other-than-temporary would be recorded to Cleco Power’s restricted storm reserve. The unrealized losses on Cleco Power’s debt securities as of March 31, 2013, were caused by interest rate movements. Cleco Power does not intend to sell the debt securities and has determined it is more likely than not that it will not be required to sell the investments before recovery of the amortized cost value. Cleco Power determined there were no material other-than-temporary impairments on its debt securities at March 31, 2013.

AtThe ~~September 30,~~following ~~2012,~~table ~~the~~provides ~~fair~~a ~~value~~reconciliation of Cleco Power'’s available-for-sale debt securities byfrom ~~contractual~~amortized ~~maturity~~cost ~~was~~to fair value at March 31, 2013 and December 31, 2012:

(THOUSANDS)	AT SEPT. 30, 2012
	AT MAR. 31, 2013								AT DEC. 31, 2012
One year or less	$	1,022
(THOUSANDS)	AMORTIZEDCOST		TOTALUNREALIZED GAINS (1)		TOTALUNREALIZEDLOSSES (1)		FAIR VALUE		AMORTIZEDCOST		TOTALUNREALIZED GAINS (1)		TOTALUNREALIZEDLOSSES (1)		FAIR VALUE
Over one year through five years	3,448
Municipal bonds	$	9,567	$	4	$	16	$	9,555	$	10,228	$	3	$	28	$	10,203
Total fair value	$	4,470
Commercial paper	1,298		—		—		1,298		649		—		—		649
Total available-for-sale debt securities	$	10,865	$	4	$	16	$	10,853	$	10,877	$	3	$	28	$	10,852
(1) Unrealized gains and losses are recorded to the restricted storm reserve.

~~There~~Cleco ~~were~~Power norecognized ~~realized~~less ~~gains~~than or$0.1 ~~losses~~million onunrealized ~~Cleco Power's available~~mark-~~for~~to-~~sale~~market ~~securities~~gains ~~during~~in the ~~three~~restricted ~~and~~storm ~~nine~~reserve for the three months ended ~~September~~March 3031, ~~2012 and 2011~~2013. ~~Realized gains and losses will be determined on a specific identification basis.~~

The following table summarizes the debt securities that were in an unrealized loss position at March 31, 2013, but for which no other-than-temporary impairment was recognized:



			LESS THAN 12 MONTHS		12 MONTHS OR LONGER
(THOUSANDS)	AGGREGATE UNREALIZED LOSS		AGGREGATE RELATED FAIR VALUE		AGGREGATE UNREALIZED LOSS		AGGREGATE RELATED FAIR VALUE
Municipal bonds	$	16	$	7,034	$	—	$	—

At March 31, 2013, the fair value of Cleco Power’s available-for-sale debt securities by contractual maturity was:



(THOUSANDS)	AT MAR. 31, 2013
One year or less	$	6,286
Over one year through five years	4,567
Total fair value	$	10,853

There were no realized gains or losses on Cleco Power’s available-for-sale debt securities during the three months ended March 31, 2013. Realized gains and losses will be determined on a specific identification basis.

Interest Rate Derivatives

Forward Starting Interest Rate Swap

On November 14, 2011, Cleco Power entered into a pay fixed/receive variable forward starting interest rate swap contract in order to mitigate the interest rate exposure on coupon payments related to athe remaining $50.0 million fixed-rate forecasted debt issuance. The forward starting interest rate swap has a spot 30-year all-in swap rate of 3.05%, notional amount of $50.0 million, with the pricing date of May 14, 2013, or the issuance of the notes, whichever is earlier. The forward starting interest rate swap meets the criteria of a cash flow hedge under the authoritative guidance as it relates to derivatives and hedging and is carried on the balance sheet at ~~its fair value. The fair market value of the forward starting interest rate swap is the~~

29its fair value. The fair value of the forward starting interest rate swap is calculated by the net of the present value of the fixed payments to be paid by Cleco Power and the present value of the three-month LIBOR payments to be received by Cleco Power. Since future LIBOR rates are not available for each month until termination, quoted LIBOR rates from an active exchange for observable time periods were used to create a forward LIBOR curve for all months until termination. Because of the inputs and common techniques used to calculate fair value, the swap valuation was considered Level 2. Cleco Power recognized $1.8 million and $4.7 million of unrealized mark-to-market gains in other comprehensive income for the three months ended March 31, 2013 and 2012, respectively. The fair market value of $0.4 million and $2.6 million for the forward starting interest rate swap was recorded on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets as an interest rate risk management liability at March 31, 2013 and December 31, 2012, respectively. At March 31, 2013, Cleco Power determined that the forward starting interest rate swap ceased to be highly effective in offsetting changes in the cash flows of the forecasted coupon payments and discontinued hedge accounting prospectively. The forward starting interest rate swap will continue to be carried at fair value on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets as an interest rate risk management asset or liability until the pricing date of May 14, 2013, or the issuance of the notes, whichever is earlier. Changes in the fair value of the forward starting interest rate swap will be recorded as deferred financing costs on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets until the pricing date of May 14, 2013, or the issuance of the notes, whichever is earlier. The $0.4 million loss on the forward starting interest rate swap at March 31, 2013, will remain in accumulated other comprehensive income and will be reclassified into interest expense over the life of the forecasted debt issuance. There was no impact to earnings due to ineffectiveness for the three months ended March 31, 2013 and 2012.

~~CLECO CORPORATION CLECO POWER 2012 3RD QUARTER FORM 10-Q~~25

~~difference~~CLECO ~~between~~CORPORATION ~~the~~CLECO ~~present~~POWER ~~value~~2013 of1ST ~~the~~QUARTER ~~fixed~~FORM ~~payments to be paid by Cleco Power and the present value of the three~~10-month LIBOR payments to be received by Cleco Power. Since future LIBOR rates are not available for each month until termination, quoted LIBOR rates from an active exchange for observable time periods were used to create a forward LIBOR curve for all months until termination. Because of the inputs and common techniques used to calculate fair value, the swap valuation was considered Level 2. Cleco Power recognized $0.8 million unrealized mark-to-market gains and $0.7 million unrealized mark-to-market losses in other comprehensive income for the three and nine months ended September 30, 2012, respectively. The fair market value of $4.1 million and $3.3 million for the forward starting interest rate swap was recorded on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets as an interest rate risk Q

management liability as of September 30, 2012 and December 31, 2011, respectively. There was no impact to earnings due to ineffectiveness for the three and nine months ended September 30, 2012.

Fair Value Measurements and Disclosures

The authoritative guidance on fair value measurements requires entities to classify assets and liabilities that are either measured or disclosed at their fair value according to three different levels depending on the inputs used in determining fair value.

The following tables disclose for Cleco and Cleco Power the fair value of financial assets and liabilities measured or disclosed on a recurring basis and within the scope of the authoritative guidance for fair value measurements and disclosures.

Cleco
	CLECO CONSOLIDATED FAIR VALUE MEASUREMENTS AT REPORTING DATE USING:
(THOUSANDS)	AT ~~SEPT~~MAR. 3031, ~~2012~~2013		QUOTED PRICES INACTIVE MARKETSFOR IDENTICALASSETS(LEVEL 1)		SIGNIFICANTOTHEROBSERVABLEINPUTS(LEVEL 2)		SIGNIFICANTUNOBSERVABLEINPUTS(LEVEL 3)		AT DEC. 31, ~~2011~~2012		QUOTED PRICES INACTIVE MARKETSFOR IDENTICALASSETS(LEVEL 1)		SIGNIFICANTOTHEROBSERVABLEINPUTS(LEVEL 2)		SIGNIFICANTUNOBSERVABLEINPUTS(LEVEL 3)
Asset Description
Institutional money market funds	$	7449,~~712~~963	$	—	$	7449,~~712~~963	$	—	$	~~118~~39,~~951~~489	$	—	$	~~118~~39,~~951~~489	$	—
Municipal bonds	$9,555	~~4,470~~	$—	—	$9,555	~~4,470~~	$—	—	$10,203	—	$—	—	$10,203	—	$—	—
Total assets	$	7959,~~182~~518	$	—	$	7959,~~182~~518	$	—	$	~~118~~49,~~951~~692	$	—	$	~~118~~49,~~951~~692	$	—
Liability Description
Energy market derivatives	$	—	$	—	$	—	$	—	$	5,336	$	—	$	5,336	$	—
Interest rate derivatives	$	424	$	—	$	424	$	—	$	2,627	$	—	$	2,627	$	—
Interest rate derivatives	4,063		—		4,063		—		3,330		—		3,330		—
Long-term debt	1,534,758		—		1,534,758		—		1,579,674		—		1,579,674		—
Long-term debt	1,553,694		—		1,553,694		—		1,542,867		—		1,542,867		—
Total liabilities	$	1,535,182	$	—	$	1,535,182	$	—	$	1,582,301	$	—	$	1,582,301	$	—
Total liabilities	$	1,557,757	$	—	$	1,557,757	$	—	$	1,551,533	$	—	$	1,551,533	$	—

Cleco Power
	CLECO POWER FAIR VALUE MEASUREMENTS AT REPORTING DATE USING:
(THOUSANDS)	AT ~~SEPT~~MAR. 3031, ~~2012~~2013		QUOTED PRICES INACTIVE MARKETSFOR IDENTICALASSETS(LEVEL 1)		SIGNIFICANTOTHEROBSERVABLEINPUTS(LEVEL 2)		SIGNIFICANTUNOBSERVABLEINPUTS(LEVEL 3)		AT DEC. 31, ~~2011~~2012		QUOTED PRICES INACTIVE MARKETSFOR IDENTICALASSETS(LEVEL 1)		SIGNIFICANTOTHEROBSERVABLEINPUTS(LEVEL 2)		SIGNIFICANTUNOBSERVABLEINPUTS(LEVEL 3)
Asset Description
Institutional money market funds	$	6147,~~115~~867	$	—	$	6147,~~115~~867	$	—	$	9933,~~955~~292	$	—	$	9933,~~955~~292	$	—
Municipal bonds	$9,555	~~4,470~~	$—	—	$9,555	~~4,470~~	$—	—	$10,203	—	$—	—	$10,203	—	$—	—
Total assets	$	6557,~~585~~422	$	—	$	6557,~~585~~422	$	—	$	9943,~~955~~495	$	—	$	9943,~~955~~495	$	—
Liability Description
Energy market derivatives	$	—	$	—	$	—	$	—	$	5,336	$	—	$	5,336	$	—
Interest rate derivatives	$	424	$	—	$	424	$	—	$	2,627	$	—	$	2,627	$	—
Interest rate derivatives	4,063		—		4,063		—		3,330		—		3,330		—
Long-term debt	1,519,758		—		1,519,758		—		1,554,674		—		1,554,674		—
Long-term debt	1,553,694		—		1,553,694		—		1,532,867		—		1,532,867		—
Total liabilities	$	1,520,182	$	—	$	1,520,182	$	—	$	1,557,301	$	—	$	1,557,301	$	—
Total liabilities	$	1,557,757	$	—	$	1,557,757	$	—	$	1,541,533	$	—	$	1,541,533	$	—

The ~~derivative~~institutional ~~assets~~money ~~and~~market ~~liabilities~~funds ~~are~~were ~~classified~~reported ason ~~either~~the ~~current~~Cleco orCondensed ~~non-current~~Consolidated ~~depending~~Balance onSheet ~~when~~in ~~the~~cash ~~positions~~and ~~close. All~~cash ~~energy~~equivalents, ~~market derivative~~ current ~~assets~~restricted cash and cash equivalents, non-current ~~liabilities~~restricted ~~are~~cash ~~reported~~and ascash aequivalents, ~~net~~and ~~current~~restricted ~~energy~~investments ~~risk~~of ~~management~~$39.6 ~~asset~~million, or$3.3 ~~liability~~million, $5. ~~All~~8 million, ~~energy~~and ~~market~~$1.3 ~~derivative~~million, ~~non-current~~respectively, ~~assets~~at ~~and~~March 31, ~~non-current~~2013. At ~~liabilities~~Cleco ~~are~~Power, ~~reported~~the ~~net~~institutional inmoney ~~other~~market ~~deferred~~funds ~~charges~~were orreported ~~other~~on ~~deferred~~the ~~credits. Net~~Condensed ~~presentation~~Consolidated isBalance ~~appropriate~~Sheet ~~due~~in tocash ~~the~~and ~~right~~cash ofequivalents, ~~offset~~current ~~included~~restricted incash ~~the~~and ~~master~~cash ~~netting~~equivalents, ~~agreements. On~~non-current ~~the~~restricted ~~balance~~cash ~~sheet~~and cash equivalents, ~~the~~and ~~net~~restricted ~~current~~investments and ~~net~~were ~~non-current~~$37.6 ~~derivative~~million, ~~positions~~$3.3 ~~are~~million, ~~netted~~$5.7 million, ~~with~~and ~~the~~$1.3 ~~applicable~~million, ~~margin~~respectively, ~~deposits~~at March 31, 2013.

The ~~institutional~~municipal ~~money~~bonds ~~market funds~~ were reported on ~~the~~Cleco and Cleco Power’s Condensed Consolidated Balance ~~Sheet~~Sheets in ~~cash~~restricted ~~and~~investments in the amount of $9.6 million at March 31, 2013.

~~cash~~The ~~equivalents,~~forward ~~current~~starting ~~restricted~~interest ~~cash~~rate ~~and~~swap ~~cash~~was ~~equivalents,~~reported ~~and~~on ~~non-current~~Cleco ~~restricted cash~~ and ~~cash equivalents in the amounts of $58.5 million, $3.4 million, and $12.8 million, respectively, at September 30, 2012. At~~ Cleco Power,’s ~~the~~Condensed ~~institutional~~Consolidated ~~money~~Balance ~~market~~Sheets ~~funds~~as ~~were~~a ~~reported~~current onliability ~~the condensed consolidated balance sheet~~ in ~~cash~~the ~~and~~line ~~cash~~item ~~equivalents,~~interest ~~current~~rate ~~restricted~~risk ~~cash~~management ~~and~~liability ~~cash~~in ~~equivalents,~~the ~~and~~amount ~~non-current~~of ~~restricted cash and cash equivalents and were~~ $~~45.~~0 ~~million, $3~~.4 million, ~~and~~at ~~$12.7 million, respectively, as of September~~March 3031, ~~2012~~2013.

~~The~~Cleco ~~municipal~~utilizes ~~bonds~~different ~~were~~valuation ~~reported~~techniques onfor ~~Cleco~~fair ~~and~~value ~~Cleco~~calculations. In ~~Power's~~order ~~Condensed~~to ~~Consolidated~~measure ~~Balance~~the ~~Sheets~~fair invalue ~~restricted~~for ~~investments~~Level in1 assets and liabilities, Cleco obtains the ~~amount~~closing ofprice ~~$4.5~~from ~~million~~published atindices ~~September 30,~~in active markets for the various instruments

30and multiplies this price by the appropriate number of instruments held. Level 2 fair values for assets and liabilities are determined by obtaining the closing price from published indices in active markets for instruments that are similar to Cleco’s assets and liabilities. The fair value obtained is then discounted to the current period using a U.S. Treasury published interest rate as a proxy for a risk-free rate of return. For some options, Cleco uses the Black-Scholes model using observable and available inputs to calculate the fair value, consistent with the income approach. These techniques have been applied consistently from fiscal period to fiscal period. Level 3 fair values allow for situations in which there is little, if any, market activity for the asset or liability at the measurement date. Cleco had no Level 3 assets or liabilities at March 31, 2013 or December 31, 2012.

CLECO CORPORATION CLECO POWER 2012 3RD QUARTER FORM 10-Q

2012.

The forward starting interest rate swap was reported on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets as a current liability in the line item interest rate risk management liability as of September 30, 2012.

Cleco utilizes different valuation techniques for fair value calculations. In order to measure the fair value for Level 1 assets and liabilities, Cleco obtains the closing price from published indices in active markets for the various instruments and multiplies this price by the appropriate number of instruments held. Level 2 fair values for assets and liabilities are determined by obtaining the closing price from published indices in active markets for instruments that are similar to Cleco’s assets and liabilities. The fair value obtained is then discounted to the current period using a U.S. Treasury published interest rate as a proxy for a risk-free rate of return. For some options, Cleco uses the Black-Scholes model using observable and available inputs to calculate the fair value, consistent with the income approach. These techniques have been applied consistently from fiscal period to fiscal period. Level 3 fair values allow for situations in which there is little, if any, market activity for the asset or liability at the measurement date. Cleco had no Level 3 assets or liabilities at September 30, 2012 or December 31, 2011.

The assets and liabilities reported at fair value are grouped into classes based on the underlying nature and risks associated with the individual asset or liability.

The Level 2 ofinstitutional ~~energy~~money market ~~derivative~~funds ~~assets~~asset ~~and liabilities~~ consists of ~~two~~a ~~classes~~single class. ~~The~~In ~~first~~order ~~class~~to ~~contains~~capture ~~natural~~interest ~~gas~~income ~~swaps~~and ~~which~~minimize ~~fluctuate~~risk, incash ~~value~~is asinvested ~~the~~in ~~underlying~~money ~~natural gas futures fair value changes, and as~~ market ~~interest~~funds ~~rates~~that ~~change. Cleco~~invest ~~records~~primarily ~~the~~in ~~mark~~short-~~to-market~~term ~~value~~securities ofissued ~~the~~by ~~natural gas swaps at~~ the ~~net present value~~U. ~~The second class consists of natural gas options~~S. ~~The~~ ~~fair~~Treasury ~~value of natural gas options fluctuates with the volatility~~ in ~~the~~order ~~fair~~to ~~value~~maintain ofliquidity ~~natural~~and ~~gas,~~achieve the ~~number~~goal of ~~days~~a ~~until~~net ~~the~~asset ~~options expire, the underlying natural gas futures price fluctuations, and market interest rates. Cleco records the mark-to-market~~ value of ~~the~~a ~~natural gas options at the net present value~~dollar. ~~Both~~The ofrisks ~~these~~associated ~~energy market derivative classes also contain counterparty execution risk because the transactions are entered into~~ with athis ~~direct~~class ~~counterparty and are not traded through an exchange.~~

The Level 2 institutional money market funds asset consists of a single class. In order to capture interest income and minimize risk, cash is invested in money market funds that invest primarily in short-term securities issued by the U.S. Treasury in order to maintain liquidity and achieve the goal of a net asset value of a dollar. The risks associated with this class are counterparty risk of the fund manager and risk of price volatility associated with the underlying securities of the fund.26

~~The~~CLECO ~~Level~~CORPORATION 2CLECO ~~municipal~~POWER ~~bonds~~2013 ~~consisted~~1ST ofQUARTER aFORM ~~single class. In order to maximize income and to meet the requirements established by the LPSC for the restricted reserve fund, restricted cash and cash equivalents were invested in short~~10-~~term, fixed-income, debt instruments in order to maintain safety and liquidity. The risks associated with this class are~~ Q

are counterparty risk of the fund manager and risk of price volatility associated with the ~~municipal~~underlying ~~bonds. Quarterly,~~securities ~~Cleco receives reports from the trustee for the investment manager which provides the fair value measurement. Cleco performs an evaluation~~ of ~~those reports to verify~~ the ~~fair value of the securities~~fund.

The Level 2 municipal bonds consisted of a single class. In order to maximize income and to meet the requirements established by the LPSC for the restricted reserve fund, restricted cash and cash equivalents were invested in short-term, fixed-income debt instruments in order to maintain safety and liquidity. The risks associated with this class are counterparty risk of the fund manager and risk of price volatility associated with the municipal bonds. Quarterly, Cleco receives reports from the trustee for the investment manager which provides the fair value measurement. Cleco performs an evaluation of those reports to verify the fair value of the securities.

The Level 2 interest rate derivative was one forward starting interest rate swap liability that consisted of a single class that only contains one instrument. The risks are changes in the three-month LIBOR rate and counterparty risk. This instrument is with a direct counterparty and not traded through an exchange.

The Level 2 long-term debt liability consists of a single class. In order to fund capital requirements, Cleco issues long-term, fixed rate debt with various tenors. The fair value of this class fluctuates as the market interest rates for fixed rate debt with similar tenors and credit ratings ~~changes~~change. The fair value of the debt could also change from period to period due to changes in the credit rating of the Cleco entity that issued the debt.

Cleco has a policy which states that transfers between Levels 1, 2, and 3 are recognized at the end of a reporting period. During the ~~nine~~three months ended ~~September~~March 3031, ~~2012~~2013, and the year ended December 31, ~~2011~~2012, Cleco did not experience any transfers between levels.

Derivatives and Hedging

The authoritative guidance on derivatives and hedging requires entities to provide transparent disclosures about a company’s derivative activities and how the related hedged items affect a company’s financial position, financial performance, and cash flows. Cleco is required to provide qualitative and quantitative disclosures about derivative fair value, gains and losses, and credit-risk-related contingent features in derivative agreements.

~~The~~At ~~following~~March ~~table~~31, ~~presents~~2013, Cleco Power determined that the ~~fair~~forward ~~values~~starting interest rate swap ceased to be highly effective in offsetting changes in the cash flows of ~~derivative~~the ~~instruments~~forecasted coupon payments and ~~their~~discontinued ~~respective~~hedge ~~line~~accounting ~~items~~prospectively. The asforward ~~recorded~~starting interest rate swap will continue to be carried at fair value on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets as an interest rate risk management asset or liability until the pricing date of ~~September 30~~May 14, ~~2012~~2013, or the issuance of the notes, whichever is earlier. Changes in the fair value of the forward starting interest rate swap will be recorded as deferred financing costs on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets until the pricing date of May 14, 2013, or the issuance of the notes, whichever is earlier. At December 31, ~~2011~~2012, Cleco and Cleco Power’s Condensed Consolidated Balance Sheets had no derivative instruments not designated as hedging instruments.

	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
	LIABILITY DERIVATIVES
(THOUSANDS)FAIR VALUE	BALANCE SHEET LINE ITEM	AT SEPT. 30, 2012		AT DEC. 31, 2011
Commodity contracts
Fuel cost hedges:
Current	Energy risk management liability, net	$	—	$	(5,336	)
Total		$	—	$	(5,336	)

For the three months ended March 31, 2013, there was no effect on Cleco and Cleco Power’s Condensed Consolidated Statements of Income for derivatives not designated as hedging instruments. For the three months ended March 31,

~~The~~2012, ~~following~~Cleco ~~table~~and ~~presents~~Cleco ~~the~~Power ~~effect~~recognized a loss of $3.5 million on derivatives not designated as hedging instruments. onIn ~~Cleco~~accordance with the authoritative guidance for regulated operations, there were no unrealized gains or losses and ~~Cleco~~no ~~Power’s~~deferred ~~Condensed~~losses ~~Consolidated~~associated ~~Statements~~with offuel ~~Income~~cost ~~for~~hedges reported in Accumulated deferred fuel on the ~~three~~balance ~~and~~sheet ~~nine~~as ~~months~~of ~~ended~~March 31, ~~September~~2013 and December 3031, 2012. As gains and ~~2011~~losses are realized in future periods, they will be recorded as Fuel used for electric generation on the income statement.

At March 31, 2013 and December 31, 2012, Cleco Power had no open positions hedged for natural gas fuel costs.

~~CLECO~~The ~~CORPORATION~~following ~~CLECO~~table ~~POWER~~presents ~~2012~~the ~~3RD~~effect ~~QUARTER~~of ~~FORM~~derivatives ~~10-Q~~designated as hedging instruments on Cleco and Cleco Power’s Condensed Consolidated Statements of Income for the three months ended March 31, 2013 and 2012.

	FOR THE THREE MONTHS ENDED SEPT. 30,											FOR THE NINE MONTHS ENDED SEPT. 30,
	FOR THE THREE MONTHS ENDED MAR. 31,
			2012				2011					2012			2011
	2013								2012
(THOUSANDS)	~~LOSS~~AMOUNTOF INGAINRECOGNIZEDIN ~~INCOME OFDERIVATIVES LINE ITEM~~OCI		~~AMOUNT OF LOSSRECOGNIZED ININCOME ONDERIVATIVES~~		AMOUNT OF LOSSRECLASSIFIED FROMACCUMULATED OCIINTO INCOME(EFFECTIVE PORTION)		~~AMOUNT OF LOSSRECOGNIZED ININCOME ONDERIVATIVES~~		AMOUNTOF GAINRECOGNIZEDIN OCI		~~LOSS IN INCOME OFDERIVATIVES LINE ITEM~~	AMOUNT OF ~~LOSSRECOGNIZED~~GAINRECLASSIFIED ~~ININCOME~~FROMACCUMULATED ~~ONDERIVATIVES~~OCIINTO INCOME(EFFECTIVE PORTION)			~~AMOUNT OF LOSS RECOGNIZED ININCOME ONDERIVATIVES~~
Commodity contracts
Interest rate derivatives (1)	$	1,762			$	(20	)*		$	4,657		$	1	*
Fuel cost hedges(1)	Fuel used for electric generation		$	(595	)		$	(5,678	)		Fuel used for electric generation	$	(8,210	)	$	(14,675	)
Total			$	(595	)		$	(5,678	)			$	(8,210	)	$	(14,675	)
(1)In accordance with the authoritative guidance for regulated operations, no unrealized gains or losses and $0.1 million of deferred losses associated with fuel cost hedges are reported in Accumulated Deferred Fuel on the balance sheet as of September 30, 2012, compared to $5.3 million of unrealized losses and $1.2 million of deferred losses associated with fuel cost hedges as of December 31, 2011. As gains and losses are realized in future periods, they will be recorded as Fuel Used for Electric Generation on the income statement.

At* ~~September 30,~~The ~~2012,~~gain ~~Cleco~~(loss) ~~Power~~reclassified ~~had~~from noaccumulated ~~open~~OCI ~~positions~~into ~~hedged~~income ~~for~~(effective ~~natural~~portion) ~~gas~~is ~~fuel~~reflected ~~costs. At~~in ~~December 31,~~interest ~~2011, Cleco Power had 2~~charges.~~2 million MMBtus hedged or approximately 3% of gas requirements for a two-year period.~~

~~The~~(1) ~~following~~During ~~tables~~the ~~present~~three ~~the~~months ~~effect~~ended March 31, 2013 and 2012, Cleco recorded $0.4 million and $2.6 million of ineffectiveness related to the interest rate derivatives as a regulatory asset, respectively.

~~designated~~At asMarch 31, ~~hedging~~2013, ~~instruments~~Cleco onPower ~~Cleco~~expected ~~and~~$0.3 ~~Cleco~~million ~~Power’s~~of ~~Condensed~~the ~~Consolidated~~effective ~~Statements~~portion of ~~Income~~deferred ~~for~~net ~~the~~losses ~~three~~related ~~and~~to ~~nine~~interest ~~months~~rate ~~ended~~derivatives ~~September 30,~~to ~~2012~~be ~~and~~reclassed ~~2011~~from accumulated OCI to interest charges over the next 12 months.

						FOR THE THREE MONTHS ENDED SEPT. 30,
	2012					2011
(THOUSANDS)	AMOUNT OF GAIN RECOGNIZED IN OCI		AMOUNT OF GAIN RECLASSIFIEDFROM ACCUMULATEDOCI INTO INCOME(EFFECTIVE PORTION)			AMOUNT OF LOSSRECOGNIZED IN OCI			AMOUNT OF GAIN RECLASSIFIEDFROM ACCUMULATEDOCI INTO INCOME(EFFECTIVE PORTION)
Interest rate derivatives	$	802	$	17	*	$	(29,962	)	$	89	*
* The gain (loss) reclassified from accumulated OCI into income (effective portion) is reflected in interest charges.

							FOR THE NINE MONTHS ENDED SEPT. 30,
	2012						2011
(THOUSANDS)	AMOUNT OF LOSS RECOGNIZED IN OCI			AMOUNT OF LOSSRECLASSIFIEDFROM ACCUMULATEDOCI INTO INCOME(EFFECTIVE PORTION)			AMOUNT OF LOSSRECOGNIZED IN OCI			AMOUNT OF GAIN RECLASSIFIEDFROM ACCUMULATEDOCI INTO INCOME(EFFECTIVE PORTION)
Interest rate derivatives(1)	$	(733	)	$	(39	)*	$	(29,962	)	$	267	*
* The (loss) gain reclassified from accumulated OCI into income (effective portion) is reflected in interest charges.
(1) During the nine months ended September 30, 2012, Cleco recorded $2.6 million of ineffectiveness related to the interest rate derivatives as a regulatory asset.

At September 30, 2012, Cleco Power expected $0.4 million of the effective portion of deferred net losses related to interest rate derivatives to be reclassed from accumulated OCI to an increase in interest charges over the next 12 months.

Note 5 — Debt

Short-term Debt

At ~~September~~March 3031, ~~2012~~2013 and December 31, ~~2011~~2012, Cleco and Cleco Power had no short-term debt outstanding.

Long-term Debt

At ~~September~~March 3031, ~~2012~~2013, Cleco ~~and Cleco Power'~~’s long-term debt outstanding was $1.33 billion, of which $9016.96 million was due within one year. The long-term debt due within one year at ~~September~~March 3031, ~~2012~~2013, represents $~~75.0 million in senior notes due May 1, 2013, $~~14.04 million principal payments for the Cleco Katrina/Rita storm recovery bonds and $12.92 million of capital lease payments. For Cleco, long-term debt decreased $33.2 million from December 31, 2011, primarily due to Cleco Power redeeming $50.1 million of DeSoto Parish pollution control bonds in May 2012 and $11.2 million of Rapides Parish pollution control bonds in January 2012. Also contributing to the decrease was a $10.0 million reduction in Cleco Corporation's credit facility draws, and $13.1 million of scheduled Cleco Katrina/Rita storm recovery bond principal

~~payments~~For ~~made~~Cleco, inlong-term ~~March~~debt ~~and~~decreased ~~September~~$17.5 million from December 31, 2012, primarily due to $60. ~~These~~0 ~~decreases~~million ~~were~~of ~~partially~~solid ~~offset~~waste bydisposal bonds reacquired in March 2013, a $10.0 million reduction in Cleco ~~Power~~Corporation’s ~~issuance~~credit offacility draws, a $507.01 million ofscheduled ~~senior~~Cleco ~~notes~~Katrina/Rita storm recovery bond principal payment made in ~~May~~March ~~2012~~2013, and a $0.5 million ofdecrease in capital lease ~~payments~~obligations. These decreases were partially offset by a $60.0 million bank term loan entered into in March 2013 and debt ~~premium~~discount amortizations of $0.71 million.

OnAt ~~January 25~~March 31, ~~2012~~2013, Cleco Power’s ~~redeemed~~long-term atdebt ~~par~~outstanding was $111.232 ~~million~~billion of 5which $16.~~875%~~6 ~~Rapides~~million ~~Parish~~was ~~pollution~~due ~~control~~within ~~bonds~~one year. The long-term debt due ~~September~~within ~~2029~~one year at March 31, 2013, represents $14.4 Asmillion ~~part~~principal ofpayments for the ~~redemption,~~ Cleco ~~Power~~Katrina/Rita ~~paid~~storm recovery bonds and $02.32 million of ~~accrued~~capital ~~interest~~lease ~~on the redeemed notes~~payments.

OnFor ~~May~~Cleco 8Power, ~~2012,~~long-term ~~Cleco~~debt ~~Power~~decreased ~~issued~~ $507.05 million ~~senior unsecured private placement notes at an interest rate of 4.33%. The maturity date of the notes is May 15, 2027. The proceeds were used~~ primarily ~~for~~due ~~the~~to ~~early redemption of~~ $5060.10 million of ~~5.875%~~solid ~~DeSoto~~waste ~~Parish~~disposal ~~pollution control~~ bonds.

On May 11, 2012, Cleco Power redeemed at par all $50.1 million of 5.875% DeSoto Parish pollution control bonds due September 2029. As part of the redemption, Cleco Power paid $0.6 million of accrued interest on the redeemed notes.27



CLECO CORPORATION
CLECO POWER		2013 1ST QUARTER FORM 10-Q

reacquired in March 2013, a $7.1 million scheduled Cleco Katrina/Rita storm recovery bond principal payment made in March 2013, and a $0.5 million decrease in capital lease obligations. These decreases were partially offset by a $60.0 million bank term loan entered into in March 2013 and debt discount amortizations of $0.1 million.

Cleco Power’s $60.0 million solid waste disposal facility bonds due 2037, which were issued by the Rapides Finance Authority for the benefit of Cleco Power in November 2007, were required to be mandatorily tendered by the bondholders for purchase on March 1, 2013, pursuant to the terms of the indenture. The bonds were issued in connection with a loan agreement between the Rapides Finance Authority and Cleco Power. On March 1, 2013, Cleco Power purchased all $60.0 million outstanding bonds at face value plus $1.6 million of accrued interest with Cleco Power’s revolving credit facility. In connection with the purchase, the interest rate of the bonds will reset each week based on the Securities Industry and Financial Markets Association index. The initial interest rate of the bonds at March 1, 2013, was 0.11% per annum. Interest expense will continue to be recorded with a corresponding amount recorded as interest income, excluding amortization of debt issuance costs. Although the bonds remain outstanding, Cleco Power has the right to redeem and cancel the debt at any time without approval of the Rapides Finance Authority. In accordance with the authoritative guidance, the bonds are considered extinguished and Cleco Power is holding the debt as treasury bonds, resulting in a net presentation on Cleco and Cleco Power's Condensed Consolidated Balance Sheets. Cleco Power has the option to remarket the bonds for new terms and new interest rates, both to be determined by market conditions.

On March 20, 2013, Cleco Power entered into a bank term loan agreement in the amount of $60.0 million. The interest rate under the agreement at March 31, 2013, was 1.085%. The interest rate is based on LIBOR and resets on a monthly basis. Proceeds of the loan agreement were used to repay draws under Cleco Power's revolving credit facility. The loan matures on May 29, 2015.

Credit Facilities

At ~~September~~March 3031, ~~2012~~2013, Cleco Corporation ~~and~~had ~~Cleco~~$15.0 ~~Power~~million ~~had~~borrowings nooutstanding under its $250.0 million credit facility at an interest rate of 1.71%. The borrowings ~~outstanding~~under the credit facility are considered to be long-term because the credit facility expires in 2016. The borrowing costs under ~~their~~the ~~respective~~facility are equal to one-month LIBOR plus 1.50% or ABR, plus facility fees of 0.25%. The existing ~~credit~~borrowings ~~facilities~~had 30-day terms. The $15.0 million draw matured and was renewed on April 29, 2013.

32At March 31, 2013, Cleco Power had no borrowings outstanding under its existing credit facility.

CLECO CORPORATION CLECO POWER 2012 3RD QUARTER FORM 10-Q

Note 6 — Pension Plan and Employee Benefits

Pension Plan and Other Benefits Plan

Most employees hired before August 1, 2007, are covered by a non-contributory, defined benefit pension plan. Benefits under the plan reflect an employee’s years of service, age at retirement, and highest total average compensation for any consecutive five calendar years during the last 10 years of employment with Cleco. Cleco’s policy is to base its contributions to the employee pension plan upon actuarial computations utilizing the projected unit credit method, subject to the IRS’s full funding limitation. During the first nine months of 2012, Cleco made no discretionary or required contributions to the pension plan and does not expect to make required or discretionary contributions to the pension plan for the remainder of the year. During 2011, Cleco made $60.0 million in discretionary contributions to the pension plan, with $40.1 million designated for the 2010 plan year and the remaining $19.9 million designated for the 2011 plan year. The required contributions are driven by liability funding target percentages set by law which could cause the required contributions to be uneven among the years. The ultimate amount and timing of the contributions may be affected by changes in the discount rate, changes in the funding regulations, and actual returns on fund assets. Cleco Power is considered the plan sponsor, and Support Group is considered the plan administrator.

to the IRS’s full funding limitation. In January 2013, Cleco Power made $34.0 million in discretionary contributions to the pension plan. Cleco does not expect to make any additional discretionary contributions to the pension plan for the remainder of the year. During 2012, Cleco made no discretionary or required contributions to the pension plan. The required contributions are driven by liability funding target percentages set by law which could cause the required contributions to be uneven among the years. The ultimate amount and timing of the contributions may be affected by changes in the discount rate, changes in the funding regulations, and actual returns on fund assets. Cleco Power is considered the plan sponsor and Support Group is considered the plan administrator.

Cleco’s retirees and their dependents are eligible to receive medical, dental, vision, and life insurance benefits (other benefits). Cleco recognizes the expected cost of these other benefits during the periods in which the benefits are earned.

The components of net periodic pension and other benefit cost for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2012~~2013 and ~~2011~~2012, are as follows:

PENSION BENEFITS

OTHER BENEFITS

FOR THE THREE MONTHS ENDED SEPT. 30,

FOR THE THREE MONTHS ENDED MAR. 31,

(THOUSANDS)

~~2012~~2013

~~2011~~2012

~~2012~~2013

~~2011~~2012

Components of periodic benefit cost:

Service cost

2,~~078~~484

2,~~097~~149

~~303~~314

~~390~~397

Interest cost

4,~~563~~437

4,~~407~~430

~~334~~481

~~443~~476

Expected return on plan assets

(5,~~201~~764

)

(65,~~161~~194

)

—

Amortizations:

Transition obligation

—

Prior period service cost

(18

)

(18

)

—

~~(51~~—

)

Net loss

23,~~087~~373

1,~~389~~783

~~112~~318

~~246~~200

Net periodic benefit cost

34,~~509~~512

13,~~714~~150

~~754~~1,117

1,~~033~~078

	PENSION BENEFITS						OTHER BENEFITS
	FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2012			2011			2012		2011
Components of periodic benefit cost:
Service cost	$	6,234		$	6,292		$	1,096	$	1,149
Interest cost	13,690			13,222			1,287		1,364
Expected return on plan assets	(15,604		)	(18,484		)	—		—
Amortizations:
Transition obligation	—			—			15		15
Prior period service cost	(53		)	(54		)	—		(154		)
Net loss	6,259			4,167			512		758
Net periodic benefit cost	$	10,526		$	5,143		$	2,910	$	3,132

Because Cleco Power is the pension plan sponsor and the related trust holds the assets, the net unfunded status of the pension plan is reflected at Cleco Power. The liability of Cleco’s other subsidiaries is transferred with a like amount of assets to Cleco Power monthly. The expense of the pension plan related to Cleco’s other subsidiaries for the three months ended March 31, 2013 and 2012, was $0.6 million and $0.5 million, respectively.

~~Since~~ Cleco ~~Power~~Corporation is the ~~pension~~ plan sponsor ~~and~~for the ~~related~~other ~~trust~~benefit ~~holds~~plans. There ~~the~~are no assets, ~~the~~set ~~net~~aside ~~unfunded~~in ~~status~~a oftrust and the ~~pension~~liabilities ~~plan~~are isreported ~~reflected~~on atthe ~~Cleco~~individual ~~Power~~subsidiaries’ financial statements. The ~~liability~~current portion of ~~Cleco’s~~the other ~~subsidiaries~~benefits isliability ~~transferred,~~for ~~with~~Cleco awas ~~like~~$3.1 million at March 31, 2013. The amount ofat ~~assets~~December 31, to2012, ~~Cleco~~was ~~Power~~also ~~monthly~~$3.1 million. The ~~expense~~current portion of the ~~pension~~other ~~plan~~benefits ~~related~~liability tofor Cleco’s ~~other~~Power ~~subsidiaries~~was ~~for~~$2.9 ~~the~~million ~~three~~at ~~and~~March 31, ~~nine~~2013. The ~~months~~amount ~~ended~~at ~~September~~December 3031, 2012, was also $02.59 million. The ~~and~~expense ~~$1.6~~related ~~million,~~to ~~respectively. Amounts~~other benefits reflected in Cleco Power’s Condensed Consolidated Statements of Income for the ~~same~~three ~~periods~~months inended ~~2011~~March 31, ~~were~~2013 ~~also~~and 2012, was $01.50 million and $10.69 million, respectively.

Cleco Corporation is the plan sponsor for the other benefit plans. There are no assets set aside in a trust, and the liabilities are reported on the individual subsidiaries’ financial statements. The current portion of the other benefits liability for Cleco was $3.1 million at September 30, 2012. The amount at December 31, 2011, was also $3.1 million. The current portion of the other benefits liability for Cleco Power was $2.9 million at September 30, 2012. The amount at December 31, 2011, was also $2.9 million. The expense related to other benefits reflected in Cleco Power’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2012, was $0.7 million and $2.5 million, respectively. Amounts for the same periods in 2011 were $0.9 million and $2.7 million, respectively.

In March 2010, the President signed the PPACA, a comprehensive health care law, which was upheld by the U.S. Supreme Court on June 28, 2012. While all provisions of the PPACA are not effective immediately, the provisions could increase the Registrants’ retiree medical unfunded liability and related expenses before the effective date. Management will continue to monitor this law and its possible impact on the Registrants.

SERP

Certain Cleco executive officers are covered by the SERP. The SERP is a non-qualified, non-contributory, defined -benefit pension plan. Benefits under the plan reflect an employee’s years of service, age at retirement, and the sum of the highest base salary paid out of the last five calendar years ~~and~~plus the average of the three highest bonuses paid during the 60 months prior to retirement, reduced by benefits received from any other defined benefit pension plan, SERP Plan, or Cleco contributions under the enhanced 401(k) Plan to the extent such contributions exceed the limits of the 401(k) Plan. Cleco does not fund the SERP liability but instead pays for current benefits out of the general funds available. Cleco Power has formed a Rabbi Trust designated as the beneficiary for life insurance policies issued on the SERP participants. Proceeds from the life insurance policies are expected to be used to pay the SERP participants’ life insurance benefits, as well as future SERP payments. However, since SERP is a non-qualified plan, the assets of the trust could be used to satisfy general creditors of Cleco in the event of insolvency. All SERP benefits are paid out of the general cash available of the respective companies from which the officer retired. No contributions to the SERP were made during the three and nine months ended September 30, 2012 or 2011. Cleco Power is considered the plan sponsor, and Support Group is considered the plan administrator.

3328

CLECO CORPORATION CLECO POWER ~~2012~~2013 ~~3RD~~1ST QUARTER FORM 10-Q

	FOR THE THREE MONTHS ENDED SEPT. 30,				FOR THE NINE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2012		2011		2012		2011
Components of periodic benefit cost:
Service cost	$	372	$	392	$	1,115	$	1,175
Interest cost	632		526		1,895		1,578
Amortizations:
Prior period service cost	13		13		40		40
Net loss	441		234		1,324		705
Net periodic benefit cost	$	1,458	$	1,165	$	4,374	$	3,498

average of the three highest bonuses paid during the 60 months prior to retirement, reduced by benefits received from any other defined benefit pension plan, SERP Plan, or Cleco contributions under the enhanced 401(k) Plan to the extent such contributions exceed the limits of the 401(k) Plan. Cleco does not fund the SERP liability but instead pays for current benefits out of the general funds available. Cleco Power has formed a Rabbi Trust designated as the beneficiary for life insurance policies issued on the SERP participants. Proceeds from the life insurance policies are expected to be used to pay the SERP participants’ life insurance benefits, as well as future SERP payments. However, because SERP is a non-qualified plan, the assets of the trust could be used to satisfy general creditors of Cleco Power in the event of insolvency. All SERP benefits are paid out of the general cash available of the respective companies from which the officer retired. No contributions to the SERP were made during the three months ended March 31, 2013 or 2012. Cleco Power is considered the plan sponsor and Support Group is considered the plan administrator.

The SERP liabilities are reported on the individual subsidiaries’ financial statements. At September 30, 2012 and December 31, 2011, the current portion of the SERP liability for Cleco was $2.5 million and $2.2 million, respectively. The current portion of the SERP liability for Cleco Power was $0.8 million at September 30, 2012. The amount at December 31, 2011, was also $0.8 million. The expense related to the SERP reflected on Cleco Power’s Condensed Consolidated Statements of Income was $0.4 million and $1.1 million for the three and nine months ended September 30, 2012, respectively, compared to $0.3 million and $0.9 million for the same periods in 2011.



	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2013		2012
Components of periodic benefit cost:
Service cost	$	506	$	1,001
Interest cost	678		574
Amortizations:
Prior period service cost	14		14
Net loss	536		309
Net periodic benefit cost	$	1,734	$	1,898

The SERP liabilities are reported on the individual subsidiaries’ financial statements. At March 31, 2013, and December 31, 2012, the current portion of the SERP liability for Cleco was $2.7 million and $2.5 million, respectively. The current portion of the SERP liability for Cleco Power was $0.8 million at March 31, 2013. The amount at December 31, 2012, was also $0.8 million. The expense related to the SERP reflected on Cleco Power’s Condensed Consolidated Statements of Income was $0.4 million for the three months ended March 31, 2013, compared to $0.3 million for the same period in 2012.

401(k) Plan

Most employees are eligible to participate in the 401(k) Plan. Under the 401(k) Plan, Cleco makes matching contributions and funds dividend reinvestments with cash. Cleco’s 401(k) Plan expense for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2012~~2013 and ~~2011~~2012 is as follows:

FOR THE THREE MONTHSENDED SEPT. 30,

FOR THE NINE MONTHSENDED SEPT. 30,

FOR THE THREE MONTHS ENDED MAR. 31,

(THOUSANDS)

~~2012~~2013

~~2011~~2012

~~2012~~

~~2011~~

401(k) Plan expense

~~963~~1,279

~~945~~1,493

~~3,303~~

~~2,998~~

Cleco Power is the plan sponsor for the 401(k) Plan. The expense of the 401(k) Plan related to Cleco’s other subsidiaries for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2012~~2013, was $0.24 million and $0.84 million, ~~respectively. Amounts~~ for the same ~~periods~~period in ~~2011 were $0~~2012.2 ~~million and $0.7 million, respectively.~~

Note 7 — Income Taxes

The following table summarizes the effective income tax rates for Cleco and Cleco Power for the three ~~and nine~~ month periods ended ~~September~~March 3031, ~~2012~~2013 and ~~2011~~2012.

	FOR THE THREE MONTHSENDED SEPT. 30,				FOR THE NINE MONTHSENDED SEPT. 30,
	FOR THE THREE MONTHS ENDED MAR. 31,
	2012		2011		2012		2011
	2013		2012
Cleco	2432.05	%	2730.39	%	~~27.8~~	%	~~30.8~~	%
Cleco Power	2533.59	%	3735.01	%	~~31.0~~	%	~~34.1~~	%

Effective Tax Rates

For the three ~~and nine~~ months ended ~~September~~March 3031, ~~2012~~2013 and ~~2011~~2012, the effective income tax rate for Cleco was different than the federal statutory rate due to permanent tax deductions, flow-through of tax benefits associated with AFUDC equity, tax benefits delivered from Cleco’'s investment in the NMTC Fund, ~~other credits, favorable settlements with taxing authorities,~~ and state tax expense.

For the three ~~and nine~~ months ended ~~September~~March 3031, ~~2012~~2013 and ~~2011~~2012, the effective income tax rate for Cleco Power was different than the federal statutory rate due to permanent tax deductions, flow-through of tax benefits associated with AFUDC equity, and state tax expense.

deductions, other credits, favorable settlements with taxing authorities, flow-through of tax benefits associated with AFUDC equity, and state tax expense.

Valuation Allowance

Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. As of ~~September~~March 3031, ~~2012~~2013, Cleco had a deferred tax asset resulting from ~~New~~NMTC ~~Markets Tax Credit~~ carryforwards of $7583.20 million. If the ~~New~~NMTC ~~Markets Tax Credit~~ carryforwards are not utilized, they will begin to expire in 2029. Management considers it more likely than not that all deferred tax assets related to ~~New~~NMTC ~~Markets Tax Credit~~ carryforwards will be realized; therefore, no valuation allowance has been recorded.

Net Operating Losses

Cleco Corporation filed its 2011 federal income tax return and ~~generated~~recorded a $477.7 million net operating loss carryforward. Of the $477.7 million net operating loss carryforward ~~generated~~, $436.9 million is attributable to Cleco Power. The net operating loss carryforward was primarily related to a tax accounting method change for bonus depreciation associated with Madison Unit 3. On July 3, 2012, Cleco filed a ~~Private~~PLR ~~Letter Ruling~~ request with the IRS in order to determine the appropriateness and timing of ~~taking~~the ~~this~~ special depreciation ~~deduction~~ for Madison Unit 3. ~~The~~On ~~IRS~~December is28, ~~expected~~2012, toCleco ~~take~~received upa tofavorable ~~six~~PLR ~~months~~from tothe ~~consider~~IRS, ~~the~~consistent ~~ruling~~with the request ~~and~~allowing ~~issue~~for athe ~~final~~additional ~~ruling~~first onyear depreciation deduction in the ~~matter~~amount of $411. ~~Cleco~~0 ~~and~~million as reflected on Cleco ~~Power~~Corporation’s ~~consider~~2011 federal income tax return. Cleco considers it more likely than not that these income tax losses generated on the 2011 income tax return will be utilized to reduce future income taxes ~~and both~~ . Cleco ~~and~~expects ~~Cleco Power expect~~ to utilize the entire net operating loss carryforward within the ~~next~~statutory ~~four years~~deadlines.

Uncertain Tax Positions

Cleco classifies all interest related to uncertain tax positions as a component of interest payable and interest expense. The total amounts of uncertain tax positions and related interest payable and interest expense, as reflected on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets and Statements of Income, are shown in the following tables.

(THOUSANDS)	AT ~~SEPT~~MAR. 3031, ~~2012~~2013		AT DEC. 31, ~~2011~~2012
Interest payable
Cleco	$	21,~~166~~352	$	131,~~843~~420
Cleco Power	$	53,~~502~~479	$	173,~~327~~358

The interest payable reflects the amount of interest anticipated to be paid to taxing authorities. These amounts do not include any offset for amounts that may be recovered from customers under existing rate orders. The amounts expected to be recoverable from Cleco Power's customers under existing rate orders at September 30, 2012 and December 31, 2011, are $6.0 million and $9.3 million, respectively.29

	FOR THE THREE MONTHSENDED SEPT. 30,						FOR THE NINE MONTHSENDED SEPT. 30,
(THOUSANDS)	2012			2011			2012			2011
Interest charges
Cleco	$	(121	)	$	93		$	(8,477	)	$	2,954
Cleco Power	$	133		$	(420	)	$	(9,504	)	$	1,356



CLECO CORPORATION
CLECO POWER		2013 1ST QUARTER FORM 10-Q

The interest ~~charges~~payable ~~reflect~~reflects the amount of interest anticipated to be paid to taxing authorities. These amounts do not include any offset for ~~the~~ amounts that may be recovered from customers under ~~the~~ existing rate orders. The amounts expected to be recoverable from Cleco Power’s customers under existing rate orders at March 31, 2013 and December 31, 2012, are $6.9 million and $6.2 million, respectively.



	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2013			2012
Interest charges
Cleco	$	(69	)	$	(5,640	)
Cleco Power	$	121		$	(7,366	)

~~CLECO~~The ~~CORPORATION~~interest ~~CLECO~~charges ~~POWER~~reflect ~~2012~~the ~~3RD~~amount ~~QUARTER~~of ~~FORM~~interest ~~10-Q~~anticipated to be paid to taxing authorities. These amounts do not include any offset for the amounts that may be recovered from or owed to customers under the existing rate orders.

~~expected~~The tofederal beincome ~~recoverable~~tax ~~from~~years ~~Cleco~~that ~~Power's~~remain ~~customers~~subject ~~under~~to ~~existing~~examination ~~rate~~by ~~orders~~the atIRS ~~September 30,~~are 2004 through 2012. The ~~and~~Louisiana state income tax years that remain subject to examination by the Louisiana Department of Revenue are 2002 through 2011. At December 31, ~~2011~~2012, ~~are~~Cleco had $360.34 million deposited with the IRS, of which $43.5 million remained to either offset tax and interest liabilities for tax years subsequent to 2003 or to be refunded. Cleco received a refund of tax and interest in January 2013 from the IRS of $142.63 million, ~~respectively~~relating to tax years 2001 through 2008.

~~The~~Cleco ~~total~~is ~~liability~~currently ~~for~~under ~~unrecognized~~audit ~~tax~~by ~~benefits~~the IRS for ~~Cleco~~the atyears ~~September 30,~~2007 through 2012. Cleco ~~and~~estimates ~~December~~that it is reasonably possible that the balance of unrecognized tax benefits as of March 31, ~~2011~~2013, iscould ~~shown~~decrease by a maximum of $0.7 million for Cleco and the balance for Cleco Power would be unchanged in the ~~following~~next ~~table~~12 months as a result of reaching settlements with the IRS and state tax authorities. The settlements could involve the payment of additional taxes, the

Cleco
(THOUSANDS)	LIABILITY FORUNRECOGNIZEDTAX BENEFITS
Balance at December 31, 2011	$	56,235
Additions for tax positions of current period	640
Reductions for tax positions of current period	—
Additions for tax positions of prior periods	—
Reduction for tax positions of prior periods	22,418
Reduction for settlement with tax authority	32,062
Reduction for lapse of statute of limitations	—
Balance at September 30, 2012	$	2,395

adjustment of deferred taxes, and/or the recognition of tax benefits, which may have an effect on Cleco’s effective tax rate.

~~The~~Cleco ~~total~~classifies ~~liability~~income ~~(asset) for unrecognized~~ tax ~~benefits~~penalties ~~for~~as ~~Cleco~~a ~~Power~~component atof ~~September 30,~~other ~~2012~~expense. During 2013 and ~~December 31~~2012, ~~2011,~~the isamount ~~shown~~of inpenalties ~~the~~recognized ~~following~~was ~~table~~immaterial.

Cleco Power
(THOUSANDS)	LIABILITY (ASSET) FORUNRECOGNIZEDTAX BENEFITS
Balance at December 31, 2011	$	52,558
Additions for tax positions of current period	640
Reductions for tax positions of current period	—
Additions for tax positions of prior periods	—
Reduction for tax positions of prior periods	21,327
Reduction for settlement with tax authority	32,062
Reduction for lapse of statute of limitations	—
Balance at September 30, 2012	$	(191	)

The federal income tax years that remain subject to examination by the IRS are 2001 through 2011. The Louisiana state income tax years that remain subject to examination by the Louisiana Department of Revenue are 2001 through 2011. In December 2010, Cleco deposited $52.2 million with the IRS associated with the years under audit. In February 2011, Cleco deposited an additional $8.2 million with the IRS associated with the years currently under audit. Of the $60.4 million deposited, $43.5 million remains to either offset tax and interest liabilities for tax years subsequent to 2003 or to be refunded.

Cleco is currently under audit by the IRS for the years 2001 through 2009. Cleco estimates that it is reasonably possible that the balance of unrecognized tax benefits as of September 30, 2012, could decrease by a maximum of $0.6 million for Cleco and the balance for Cleco Power would be unchanged in the next 12 months as a result of reaching settlements with the IRS and state tax authorities. The settlements could involve the payment of additional taxes, the adjustment of deferred taxes, and/or the recognition of tax benefits, which may have an effect on Cleco’s effective tax rate.

Note 8 — Disclosures about Segments

Cleco’s reportable segments are based on its method of internal reporting, which disaggregates business units by first-tier subsidiary. Cleco’s reportable segments are Cleco Power and Midstream. The ~~reconciling items in the following tables consist of the~~ holding company, a shared services subsidiary, two transmission interconnection ~~facilities~~facility subsidiaries, and an investment subsidiary are shown as Other in the following tables.

Each reportable segment engages in business activities from which it earns revenue and incurs expenses. Segment managers report periodically to Cleco’s Chief Executive Officer (the chief operating decision-maker) with discrete financial information and, at least quarterly, present discrete financial information to Cleco Corporation’s Board of Directors. Each reportable segment prepared budgets for ~~2012~~2013 that were presented to and approved by Cleco Corporation’s Board of Directors.

The financial results of Cleco’s segments are presented on an accrual basis. Management evaluates the performance of its segments and allocates resources to them based on segment profit and the requirements to implement new strategic initiatives and projects to meet current business objectives. Material intercompany transactions occur on a regular basis. These intercompany transactions relate primarily to the power purchase agreement between Cleco Power and Evangeline that began in 2012, and joint and common administrative support services provided by Support Group.



SEGMENT INFORMATION FOR THE THREE MONTHS ENDED MARCH 31,
2013 (THOUSANDS)	CLECO POWER			MIDSTREAM			OTHER			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	229,425		$	—		$	—		$	—		$	229,425
Tolling operations	—			4,837			—			(4,837		)	—
Other operations	11,038			1			504			—			11,543
Electric customer credits	(21		)	—			—			—			(21		)
Affiliate revenue	336			—			11,925			(12,261		)	—
Operating revenue, net	$	240,778		$	4,838		$	12,429		$	(17,098	)	$	240,947
Depreciation	$	32,330		$	1,500		$	203		$	(1	)	$	34,032
Interest charges	$	21,349		$	(239	)	$	163		$	183		$	21,456
Interest income	$	198		$	—		$	(180	)	$	183		$	201
Federal and state income tax expense (benefit)	$	14,238		$	(840	)	$	(317	)	$	—		$	13,081
Net income (loss)	$	27,793		$	(1,334	)	$	674		$	—		$	27,133
Additions to long-lived assets	$	41,558		$	1,829		$	561		$	—		$	43,948
Equity investment in investees	$	14,532		$	—		$	8		$	1		$	14,541
Total segment assets	$	3,827,103		$	212,889		$	174,057		$	(146,917	)	$	4,067,132

~~CLECO CORPORATION CLECO POWER 2012 3RD QUARTER FORM 10-Q~~30

SEGMENT INFORMATION FOR THE THREE MONTHS ENDED SEPTEMBER 30,
2012 (THOUSANDS)	CLECOPOWER			MIDSTREAM			RECONCILINGITEMS			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	282,894		$	—		$	—		$	—		$	282,894
Tolling operations	—			13,890			—			(13,890		)	—
Other operations	14,905			1			502			—			15,408
Electric customer credits	(930		)	—			—			—			(930		)
Affiliate revenue	343			—			12,343			(12,686		)	—
Operating revenue, net	$	297,212		$	13,891		$	12,845		$	(26,576	)	$	297,372
Depreciation	$	33,199		$	1,499		$	233		$	—		$	34,931
Interest charges	$	21,962		$	(69	)	$	(124	)	$	197		$	21,966
Interest income	$	129		$	—		$	(194	)	$	197		$	132
Federal and state income tax expense (benefit)	$	19,740		$	2,489		$	(2,050	)	$	—		$	20,179
Segment profit	$	57,783		$	3,429		$	2,606		$	—		$	63,818
Additions to long-lived assets	$	65,073		$	799		$	503		$	—		$	66,375
Equity investment in investees	$	14,532		$	—		$	9		$	—		$	14,541
Total segment assets	$	3,840,131		$	221,503		$	194,996		$	(149,737	)	$	4,106,893



CLECO CORPORATION
CLECO POWER		2013 1ST QUARTER FORM 10-Q

2011 (THOUSANDS)	CLECOPOWER		MIDSTREAM			RECONCILINGITEMS			ELIMINATIONS			CONSOLIDATED
2012 (THOUSANDS)	CLECOPOWER		MIDSTREAM			OTHER			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	~~324~~209,~~532~~590	$	—		$	—		$	—		$	~~324~~209,~~532~~590
Tolling operations	—		91,~~133~~234			—			—(1,234		)	~~9,133~~—
Other operations	1510,~~565~~448		1			~~500~~497			(2—		)	1610,~~064~~946
Electric customer credits	12,~~852~~237		—			—			—			12,~~852~~237
Affiliate revenue	~~347~~345		—			1311,~~448~~607			(1311,~~795~~952		)	$	—
Operating revenue, net	$	~~342~~222,~~296~~620	$	91,~~134~~235		$	1312,~~948~~104		$	(13,~~797~~186	)	$	~~351~~222,~~581~~773
Depreciation	$	2930,~~539~~090	$	1,~~457~~532		$	~~241~~224		$	—		$	31,~~237~~846
Interest charges	$	2518,~~306~~486	$	~~752~~1,471		$	~~(308~~619	)	$	2948		$	2520,~~779~~624
Interest income	$	~~276~~30	$	5—		$	~~199~~(44	)	$	2948		$	~~509~~34
Equity loss from investees, before tax	$	—	$	—		$	(1	)	$	—		$	(1	)
Federal and state income tax expense (benefit)	$	3114,~~656~~507	$	~~444~~739		$	(71,~~363~~835	)	$	—(1	)	$	2413,~~737~~410
Segment profit	$	53,833	$	5,946		$	6,063		$	—		$	65,842
Net income	$	26,805	$	1,090		$	2,136		$	—		$	30,031
Additions to long-lived assets	$	7638,~~213~~977	$	~~4,074~~(13	)	$	81387		$	—		$	8039,~~368~~351
Equity investment in investees (1)	$	14,532	$	—		$	8		$	—		$	14,540
Total segment assets (1)	$	3,~~726~~871,~~471~~729	$	~~233~~215,~~891~~342		$	201,~~074~~678		$	(~~111~~141,~~234~~400	)	$	4,~~050~~147,~~202~~349
(1) Balances as of December 31, 2011
(1) Balances as of December 31, 2012

CLECO CORPORATION CLECO POWER 2012 3RD QUARTER FORM 10-Q

SEGMENT INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30,
2012 (THOUSANDS)	CLECOPOWER		MIDSTREAM		RECONCILINGITEMS			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	720,776	$	—	$	—		$	—		$	720,776
Tolling operations	—		21,434		—			(21,434		)	—
Other operations	36,967		2		1,496			(1		)	38,464
Electric customer credits	1,025		—		—			—			1,025
Affiliate revenue	1,030		—		37,540			(38,570		)	—
Operating revenue	$	759,798	$	21,436	$	39,036		$	(60,005	)	$	760,265
Depreciation	$	93,847	$	4,491	$	689		$	1		$	99,028
Interest charges	$	61,253	$	244	$	1,320		$	388		$	63,205
Interest income	$	153	$	—	$	(379	)	$	389		$	163
Equity income from investees, before tax	$	—	$	—	$	1		$	—		$	1
Federal and state income tax expense (benefit)	$	54,748	$	7,278	$	(7,916	)	$	—		$	54,110
Segment profit	$	121,873	$	11,053	$	7,610		$	—		$	140,536
Additions to long-lived assets	$	159,836	$	6,811	$	1,371		$	—		$	168,018
Equity investment in investees	$	14,532	$	—	$	9		$	—		$	14,541
Total segment assets	$	3,840,131	$	221,503	$	194,996		$	(149,737	)	$	4,106,893

2011 (THOUSANDS)	CLECOPOWER			MIDSTREAM		RECONCILINGITEMS			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	823,484		$	—	$	—		$	—		$	823,484
Tolling operations	—			16,137		—			—			16,137
Other operations	40,261			8		1,511			(5		)	41,775
Electric customer credits	(3,405		)	—		—			—			(3,405		)
Affiliate revenue	1,041			45		37,544			(38,428		)	202
Operating revenue	$	861,381		$	16,190	$	39,055		$	(38,433	)	$	878,193
Depreciation	$	86,650		$	4,370	$	728		$	1		$	91,749
Interest charges	$	74,029		$	1,963	$	1,891		$	128		$	78,011
Interest income	$	557		$	6	$	103		$	128		$	794
Equity income (loss) from investees, before tax	$	—		$	62,053	$	(2	)	$	—		$	62,051
Federal and state income tax expense (benefit)	$	61,935		$	21,296	$	(9,781	)	$	1		$	73,451
Segment profit (1)	$	119,557		$	39,274	$	6,374		$	—		$	165,205
Additions to long-lived assets	$	152,082		$	5,202	$	749		$	—		$	158,033
Equity investment in investees (2)	$	14,532		$	—	$	8		$	—		$	14,540
Total segment assets (2)	$	3,726,471		$	233,891	$	201,074		$	(111,234	)	$	4,050,202
(1) Reconciliation of segment profit to consolidated profit:	Segment profit								$	165,205
(2) Balances as of December 31, 2011	Unallocated items:
	Preferred dividends requirements								26
	Preferred stock redemption costs								112
	Net income applicable to common stock								$	165,067

CLECO CORPORATION CLECO POWER 2012 3RD QUARTER FORM 10-Q

Note 9 — Electric Customer Credits

~~Beginning~~The incurrent ~~2010, the~~ amount of Cleco Power’s ~~yearly~~annual retail earnings is subject to the terms of an FRP established by the LPSC~~. The~~ ~~rates and the FRP became~~ effective ~~upon commencement of commercial operations at Madison Unit 3 on~~ February 12, 2010. The ~~2010~~ FRP allows Cleco Power the opportunity to earn a target return on equity of 10.7%, including returning to retail customers 60% of retail earnings between 11.3% and 12.3% and all retail earnings over 12.3%. The amount of credits due customers, if any, is determined by Cleco Power and the LPSC annually. ~~The ultimate amount of any customer refund is subject to LPSC approval.~~ Cleco Power must file annual monitoring reports no later than October 31 for the 12-month period ending June 30. In April 2013, Cleco Power filed an application with the LPSC to extend its current FRP and seek rate recovery of the Coughlin asset. Cleco Power requested in its application that the FRP extension be effective through June 2020.

On October 31, ~~2011~~2012, Cleco Power filed its report for the 12 months ended June 30, ~~2011~~2012, which indicated that $5.1.7 million was due to be returned to customers. OnThe ~~July~~ultimate ~~18,~~amount ~~2012,~~of ~~the~~any ~~LPSC~~customer ~~approved~~refund ~~the~~is ~~monitoring~~subject ~~report~~to LPSC approval. The accrual for ~~the~~estimated 12electric ~~months~~customer ~~ended~~credits ~~June 30, 2011.~~ reflected on Cleco ~~Power~~Corporation ~~issued~~and ~~refunds~~Cleco ~~for~~Power’s ~~this~~Condensed ~~filing~~Consolidated onBalance ~~customers'~~Sheets ~~bills~~at ~~during~~March 31, ~~the~~2013, ~~third~~was ~~quarter~~$4.2 ofmillion. At December 31, 2012, this amount was also $4.2 million.

Cleco Power expects to file its monitoring report for the 12 months ended June 30, 2012, by October 31, 2012, which will indicate $1.7 million is due to be returned to customers.

The accrual for estimated electric customer credits reflected on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets at September 30, 2012 and December 31, 2011, was $2.5 million and $7.3 million, respectively.

Note 10 — Variable Interest Entities

Cleco reports its investments in VIEs in accordance with the authoritative guidance. Cleco and Cleco Power report the investment in Oxbow on the equity method of accounting. Under the equity method, the assets and liabilities of this entity are reported as equity investment in investees on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets. The revenue and expenses (excluding income taxes) of this entity are netted and reported as equity income or loss from investees on Cleco and Cleco Power’s Condensed Consolidated Statements of Income.

Prior to April 30, 2011, Cleco Corporation also reported its investment in Cajun on the equity method of accounting. In conjunction with the disposition of Acadia Unit 2, APH received 100% ownership in Acadia in exchange for its 50% interest in Cajun, and Acadia became a consolidated subsidiary of APH.

Consolidated VIEs

Acadia

In October 2009, Acadia and Entergy Louisiana announced that definitive agreements had been executed whereby Entergy Louisiana would acquire Acadia Unit 2. On April 29, 2011, Acadia completed its disposition of Acadia Unit 2 to Entergy Louisiana for $298.8 million. Following the disposition, Acadia no longer owns any materials and supply inventory, property, plant, and equipment, or land. Following the transaction, ongoing operations at Acadia are minimal, relating only to the previously established accounts receivable, accounts payable, and servicing indemnifications which Cleco assumed in the transaction. In conjunction with the transaction, APH received 100% ownership in Acadia in exchange for its 50% interest in Cajun, and Acadia became a consolidated subsidiary of APH. For more information on the

Acadia Unit 2 transaction, see Note 13 — “Acadia Unit 2 Transaction.”

The following table contains summarized financial information for Cajun prior to the disposition of Acadia Unit 2.

(THOUSANDS)	FOR THE NINE MONTHSENDED SEPT. 30, 2011*
Operating revenue		$	5,227
Operating expenses		5,914
Gain on sale of assets		71,422
Other income		929
Income before taxes		$	71,664
*The 2011 income statement includes only activity through the April 29, 2011, reconsolidation.

Prior to the reconsolidation, income tax expenses related to Cajun were recorded on APH’s financial statements. For the four months ended April 30, 2011, income tax expenses related to Cajun on APH’s financial statements were $24.0 million.

Equity Method VIEs

Equity investment in investees at ~~September~~March 3031, ~~2012~~2013, primarily represented Cleco Power’s $14.5 million investment in Oxbow. Equity investments ~~which~~that are less than 100% owned by Cleco ~~Innovations LLC represented less than $0.1 million of the total balance.~~

Innovations LLC represented less than $0.1 million of the total balance.

The following table presents the equity income (loss) from each investment accounted for using the equity method.

	FOR THE THREE MONTHSENDED SEPT. 30,					FOR THE NINE MONTHSENDED SEPT. 30,
(THOUSANDS)	2012		2011			2012		2011
Cajun	$	—	$	—		$	—	$	62,053
Subsidiaries less than 100% owned by Cleco Innovations	—		(1		)	1		(2		)
Total equity (loss) income	$	—	$	(1	)	$	1	$	62,051

Oxbow

Oxbow is owned 50% by Cleco Power and 50% by SWEPCO and is accounted for as an equity method investment. Cleco Power is not the primary beneficiary because it shares the power to control Oxbow’s significant activities with SWEPCO. Cleco’s current assessment of its maximum exposure to loss related to Oxbow at ~~September~~March 3031, ~~2012~~2013, consisted of its equity investment of $14.5 million. The following table presents the components of Cleco Power’s equity investment in Oxbow.

INCEPTION TO DATE (THOUSANDS)	AT ~~SEPT~~MAR. 3031, ~~2012~~2013		AT DEC. 31, ~~2011~~2012
Purchase price	$	12,873	$	12,873
Cash contributions	1,659		1,659
Total equity investment in investee	$	14,532	$	14,532

The following table compares the carrying amount of Oxbow’s assets and liabilities with Cleco’s maximum exposure to loss related to its investment in Oxbow.

(THOUSANDS)	AT ~~SEPT~~MAR. 3031, ~~2012~~2013		AT DEC. 31, ~~2011~~2012
Oxbow’s net assets/liabilities	$	29,065	$	29,065
Cleco Power’s 50% equity	$	14,532	$	14,532
Cleco’s maximum exposure to loss	$	14,532	$	14,532

CLECO CORPORATION CLECO POWER 2012 3RD QUARTER FORM 10-Q

The following tables contain summarized financial information for Oxbow.

(THOUSANDS)	AT ~~SEPT~~MAR. 3031, ~~2012~~2013		AT DEC. 31, ~~2011~~2012
Current assets	$	1,~~753~~933	$	1,~~711~~814
Property, plant, and equipment, net	2322,~~119~~914		23,~~339~~029
Other assets	4,~~247~~262		4,~~128~~248
Total assets	$	29,~~119~~109	$	29,~~178~~091
Current liabilities	$	2444	$	4026
Other liabilities	30		73
Partners’ capital	29,065		29,065
Total liabilities and partners’ capital	$	29,~~119~~109	$	29,~~178~~091

	FOR THE THREE MONTHSENDED SEPT. 30,				FOR THE NINE MONTHSENDED SEPT. 30,
(THOUSANDS)	2012		2011		2012		2011
Operating revenue	$	450	$	382	$	1,125	$	880
Operating expenses	450		382		1,125		880
Income before taxes	$	—	$	—	$	—	$	—



CLECO CORPORATION
CLECO POWER		2013 1ST QUARTER FORM 10-Q



	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2013		2012
Operating revenue	$	429	$	381
Operating expenses	429		381
Income before taxes	$	—	$	—

Oxbow’s property, plant, and equipment, net consists of land and lignite reserves. The lignite reserves are intended to be used to provide fuel to the Dolet Hills Power Station. DHLC mines the lignite reserves at Oxbow through the Amended Lignite Mining Agreement.

Oxbow has no third-party agreements, guarantees, or other third-party commitments that contain obligations affecting Cleco Power’s investment in Oxbow.

Note 11 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees

Litigation

Devil’s Swamp

In October 2007, Cleco received a Special Notice for Remedial Investigation and Feasibility Study (RI/FS) from the EPA pursuant to CERCLA (also known as the Superfund statute). CERCLA establishes several classes of ~~potentially responsible parties (~~PRPs) for a contaminated site, and imposes strict, joint , and several liability on those PRPs for the cost of response to the contamination. The special notice requested that Cleco Corporation and Cleco Power, along with many other listed PRPs, enter into negotiations with the EPA for the performance of an RI/FS at an area known as the Devil’s Swamp Lake site just northwest of Baton Rouge, Louisiana. The EPA has identified Cleco as one of many companies sending PCB wastes for disposal to the site. The Devil’s Swamp Lake site has been proposed to be added to the National Priorities List ~~(NPL)~~ based on the release of PCBs to fisheries and wetlands located on the site~~. The~~, ~~EPA~~but ~~has~~no ~~yet to make a~~ final determination onhas ~~whether~~been ~~to add Devil’s Swamp Lake site to the NPL~~made. The PRPs began discussing a potential proposal to the EPA in February 2008. The ~~and~~EPA ~~since~~issued ~~that~~a ~~time,~~Unilateral ~~Cleco~~Administrative isOrder ~~unaware~~to ofPRP’s ~~any~~Clean ~~progress~~Harbors, ~~made~~Inc. inand ~~regard~~Baton Rouge Disposal to ~~the~~Conduct an RI/FS ~~negotiations~~on December 3, 2009. The Tier 1 part of the study was complete as of June 25, 2012. Currently, the study/remedy selection task continues. Therefore, management is unable to determine how significant Cleco’s share of the costs associated with the RI/FS and possible response action at the facility site, if any, may be and whether or not this will have a material adverse effect on the Registrants’ financial condition, results of operations, or cash flows.

Discrimination Complaints

OnIn December ~~11,~~ 2009, a complaint was filed in the U.S. District Court for the Western District of Louisiana (the Court) on behalf of eight current employees and four former employees alleging that Cleco discriminated against each of them on the basis of race. Each is seeking various remedies provided under applicable statutes prohibiting racial discrimination in the workplace, and together, the plaintiffs seek monetary compensation exceeding $35.0 million. OnIn July ~~29,~~ 2010, the plaintiffs moved to add an additional current employee alleging that Cleco had discriminated on the basis of race. The additional plaintiff seeks compensation of no less than $2.5 million and became the 13th plaintiff. OnIn April ~~13,~~ 2011, Cleco entered into a settlement with one of the current employees which resulted in a dismissal of one of the 13 cases with prejudice. In September 2011, the Court ruled on Cleco’s summary judgment motions. The judge granted and denied the motions in part, with the end result that 11 out of 12 of the remaining plaintiffs have at least one claim remaining. The Court has severed the cases of the 11 remaining plaintiffs for further proceedings, and, if necessary, the trial. Additional depositions were completed in February 2012, and Cleco filed a summary judgment motion in each of the remaining 11 cases on March 8, 2012. Each of such motions was fully briefed and submitted for decision by May 11, 2012. None of these cases has been set for trial and likely will not be set until the Court rules on Cleco’s motions for summary judgment.

Onentered ~~July~~into ~~31,~~a ~~2012,~~settlement ~~nine~~with one of the ~~eleven~~current ~~plaintiffs~~employees inwhich ~~the~~resulted ~~pending~~in ~~discrimination~~a ~~suits~~dismissal ~~described~~of ~~above~~one ~~filed~~of athe ~~new~~thirteen ~~lawsuit~~cases inwith ~~the~~prejudice. In ~~same~~September ~~federal~~2011, ~~court~~the inCourt ~~Shreveport~~ruled ~~alleging~~on ~~that~~ Cleco’s ~~and~~summary ~~its~~judgment ~~Chief~~motions. The ~~Executive~~judge ~~Officer~~granted ~~retaliated~~and ~~against~~denied ~~them~~the ~~for~~motions ~~pursuing~~in ~~their~~part, ~~discrimination~~with ~~claims~~the byend ~~directly~~result ~~writing~~that ~~them~~eleven anof ~~offer~~the oftwelve ~~settlement~~remaining ~~that~~plaintiffs ~~contained~~had ~~allegedly~~at ~~intimidating~~least ~~threats~~one claim remaining. The ~~nine~~Court ~~plaintiffs~~severed ~~consist~~the cases of ~~six~~the ~~current~~eleven ~~employees~~remaining plaintiffs for further proceedings, and, ~~three~~if ~~former~~necessary, ~~employees~~for trial. ~~The~~Additional ~~plaintiffs~~depositions ~~filed~~were ancompleted ~~amended~~in ~~complaint~~February on2012 ~~August~~and ~~29,~~Cleco ~~2012,~~filed ~~stating~~a ~~that~~summary ~~such~~judgment ~~settlement~~motion ~~letters~~in ~~were~~each ~~delivered~~of tothe ~~legal~~remaining ~~counsel~~eleven ~~for~~cases ~~each~~in March 2012. Each of ~~the~~such ~~plaintiffs~~motions ~~and~~was ~~not~~fully ~~directly~~briefed toand ~~the~~submitted ~~plaintiffs.~~for Ondecision ~~September~~by 6,May 2012. In February 2013, ~~Cleco~~the ~~filed~~court aruled on the second motion tofor ~~dismiss~~summary ~~the~~judgment ~~lawsuit. The~~in ~~basis~~each of ~~such~~the ~~motion~~eleven iscases ~~Cleco's~~and ~~argument~~each ~~that~~such ~~statements~~case ~~made~~was indismissed anwith ~~offer~~prejudice. Of ofthe ~~settlement~~eleven ~~cannot~~dismissed ~~constitute~~cases, ~~retaliation~~appeals ~~and~~were ~~give~~filed ~~rise~~in toten ~~damages~~of ~~pursuant~~the cases to ~~judicial~~the ~~policies~~United ~~favoring~~States ~~settlement~~Court of Appeals for the Fifth Circuit. ~~Otherwise~~Briefing ~~Cleco~~in ~~argues~~each ~~that~~of the ~~amended~~appeals ~~complaint~~is ~~fails~~expected to ~~state~~be acomplete ~~cause~~by ofJuly ~~action~~5, ~~upon~~2013. The ~~which~~dismissal ~~relief~~in ~~can~~the beeleventh ~~granted~~case, that was not appealed, is now final.

In ~~view~~July of2012, nine plaintiffs in the ~~uncertainty~~pending ofdiscrimination suits described above filed a new lawsuit in the same federal court in Shreveport alleging that Cleco and its Chief Executive Officer retaliated against them for pursuing their discrimination claims by directly writing them an offer of settlement that contained allegedly intimidating threats. The nine plaintiffs consist of six current employees and three former employees. The plaintiffs filed an amended complaint in August 2012, ~~management~~stating isthat such settlement letters were delivered to legal counsel for each of the plaintiffs and not ~~able~~directly to ~~predict~~the orplaintiffs. ~~give~~In September 2012, Cleco filed a ~~reasonable~~motion ~~estimate~~to ofdismiss the ~~possible~~lawsuit. In ~~range~~November ~~of liability~~2012, ifthe ~~any~~U.S. Magistrate recommended that Cleco’s motion be granted and that the lawsuit be dismissed with prejudice. On January 23, of2013, ~~these~~the motion to dismiss was granted and the retaliation claims were dismissed with prejudice. This case was not appealed and the dismissal is now final.

City of Opelousas

OnIn March 9, 2010, a complaint was filed in the 27th Judicial District Court of St. Landry Parish, State of Louisiana, on behalf of three Cleco Power customers in Opelousas, Louisiana. The complaint alleges that Cleco Power overcharged the plaintiffs by applying to customers in Opelousas the same retail rates as Cleco Power applies to all of its retail customers. The plaintiffs claim that Cleco Power owes customers in Opelousas more than $30.0 million as a result of the alleged overcharges. The plaintiffs allege that Cleco Power should have established, solely for customers in Opelousas, retail rates that are separate and distinct from the retail rates that apply to other customers of Cleco Power and that Cleco Power should not collect from customers in Opelousas the storm surcharge approved by the LPSC following hurricanes Katrina and Rita. Cleco Power currently operates in Opelousas pursuant to a franchise granted to Cleco Power by the City of Opelousas in 1986 and an operating and franchise agreement dated May 14, 1991, pursuant to which Cleco Power operates its own electric facilities and leases and operates electric facilities owned by the City of Opelousas. In July 2011, the operating and franchise agreements were amended and extended for a period of ten years, until August 2021. In April 2010, Cleco Power filed a petition with the LPSC appealing to its expertise in declaring that the ratepayers of Opelousas have been properly charged the rates that are applicable to Cleco Power’s retail customers and that no overcharges have been

3932

CLECO CORPORATION CLECO POWER ~~2012~~2013 ~~3RD~~1ST QUARTER FORM 10-Q

an operating and franchise agreement dated May 14, 1991, pursuant to which Cleco Power operates its own electric facilities and leases and operates electric facilities owned by the City of Opelousas. In April 2010, Cleco Power filed a petition with the LPSC appealing to its expertise in declaring that the ratepayers of Opelousas have been properly charged the rates that are applicable to Cleco Power’s retail customers and that no overcharges have been collected. In addition, Cleco Power removed the purported class action lawsuit filed on behalf of Opelousas electric customers from the state court to the U.S. District Court for the Western District of Louisiana in April 2010, so that it could be properly addressed under the terms of the Class Action Fairness Act. On May 11, 2010, a second class action lawsuit was filed in the 27th Judicial District Court for St. Landry Parish, State of Louisiana, repeating the allegations of the first complaint, which was submitted on behalf of 249 Opelousas residents. Cleco Power has responded in the same manner as with the first class action lawsuit. In September 2010, the federal court remanded both cases to the state court in which they were originally filed for further proceedings. In January 2011, the presiding judge in the state court proceeding ruled that the jurisdiction to hear the two class actions resides in the state court and not with the LPSC as argued by both Cleco and the LPSC Staff. Both Cleco and the LPSC Staff appealed this ruling to the Third Circuit Court of Appeals for the State of Louisiana (Third Circuit). In September 2011, the Third Circuit denied both appeals. In October 2011, both Cleco and the LPSC appealed the Third Circuit’s ruling to the Louisiana Supreme Court. In November 2011, the Louisiana Supreme Court granted the appeals and remanded the case to the Third Circuit for further briefing, argument, and opinion. In February 2011, the administrative law judge (ALJ) in the LPSC proceeding ruled that the LPSC has jurisdiction to decide the claims raised by the class action plaintiffs. At its December 2011 Business and Executive Session, the LPSC adopted the ALJ’s recommendation that Cleco be granted summary judgment in its declaratory action finding that Cleco’s ratepayers in the City of Opelousas have been served under applicable rates and policies approved by the LPSC and Cleco’s Opelousas ratepayers have not been overcharged in connection with LPSC rates or ratemaking. On January 30, 2012, the class action plaintiffs filed their appeal of such LPSC decision to the 19th Judicial District Court for Baton Rouge Parish, State of Louisiana. On February 15, 2012, the Third Circuit ruled that the state court, and not the LPSC, has jurisdiction to hear the case. On March 15, 2012, Cleco Power appealed the Third Circuit’s ruling to the Louisiana Supreme Court asking that it overturn the Third Circuit decision and confirm the LPSC’s exclusive jurisdiction over this matter. The LPSC also appealed the Third Circuit’s ruling to the Louisiana Supreme Court in March 2012. On May 18, 2012, the Louisiana Supreme Court granted the writ application of Cleco Power and the LPSC and set the matter for further briefing on the merits of the jurisdiction question raised in the writ application. Such briefing was completed during the third quarter of 2012 and the Louisiana Supreme Court heard oral arguments on September 7, 2012. A decision from the Louisiana Supreme Court is expected during the fourth quarter of 2012. In view of the uncertainty of the claims, management is not able to predict or give a reasonable estimate of the possible range of liability, if any, of these claims. However, if it is found that Cleco Power overcharged customers resulting in

In May 2010, a second class action lawsuit was filed in the 27th Judicial District Court for St. Landry Parish, State of Louisiana, repeating the allegations of the first complaint, which was submitted on behalf of 249 Opelousas residents. Cleco Power has responded in the same manner as with the first class action lawsuit. In September 2010, the federal court remanded both cases to the state court in which they were originally filed for further proceedings. In January 2011, the presiding judge in the state court proceeding ruled that the jurisdiction to hear the two class actions resides in the state court and not with the LPSC as argued by both Cleco and the LPSC Staff. Both Cleco and the LPSC Staff appealed this ruling to the Third Circuit Court of Appeals for the State of Louisiana (Third Circuit). In September 2011, the Third Circuit denied both appeals. In October 2011, both Cleco and the LPSC appealed the Third Circuit’s ruling to the Louisiana Supreme Court. In November 2011, the Louisiana Supreme Court granted the appeals and remanded the case to the Third Circuit for further briefing, argument, and opinion. In February 2011, the administrative law judge (ALJ) in the LPSC proceeding ruled that the LPSC has jurisdiction to decide the claims raised by the class action plaintiffs. At its December 2011 Business and Executive Session, the LPSC adopted the ALJ’s recommendation that Cleco be granted summary judgment in its declaratory action finding that Cleco’s ratepayers in the City of Opelousas have been served under applicable rates and policies approved by the LPSC and Cleco’s Opelousas ratepayers have not been overcharged in connection with LPSC rates or ratemaking. In January 2012, the class action plaintiffs filed their appeal of such LPSC decision to the 19th Judicial District Court for Baton Rouge Parish, State of Louisiana. In February 2012, the Third Circuit ruled that the state court, and not the LPSC, has jurisdiction to hear the case. In March 2012, Cleco Power appealed the Third Circuit’s ruling to the Louisiana Supreme Court asking that it overturn the Third Circuit decision and confirm the LPSC’s exclusive jurisdiction over this matter. The LPSC also appealed the Third Circuit’s ruling to the Louisiana Supreme Court in March 2012. In May 2012, the Louisiana Supreme Court granted the writ application of Cleco Power and the LPSC and set the matter for further briefing on the merits of the jurisdiction question raised in the writ application. Such briefing was completed during the third quarter of 2012 and the Louisiana Supreme Court heard oral arguments in September 2012. In December 2012, the Louisiana Supreme Court issued its opinion accepting Cleco’s jurisdictional arguments and dismissed the state court claims. The only matter remaining is before the 19th Judicial District Court to review the LPSC ruling in Cleco’s favor that it had properly charged the ratepayers of Opelousas. In view of the uncertainty of the claims, management is not able to predict or give a reasonable estimate of the possible range of liability, if any, of these claims. However, if it is found that Cleco Power overcharged customers resulting in a refund, any such refund could have a material adverse effect on the Registrants’ results of operations, financial condition, and cash flows.

on the Registrants’ results of operations, financial condition, and cash flows.

LPSC Audits

Fuel Audit

The cost of fuel used for electric generation and the cost of power purchased for utility customers are recovered through an LPSC-established fuel adjustment clause that enables Cleco Power to pass on to its customers substantially all such charges. The LPSC Fuel Adjustment Clause General Order issued November 6, 1997, in Docket No. U-21497 provides that an audit of fuel adjustment clause filings will be performed not less than every other year. In March 2009, the LPSC initiated an audit of fuel adjustment clause filings for the years 2003 through 2008. The total amount of fuel expenses included in the audit was approximately $3.26 billion. In February 2012, the LPSC Staff’s consultant issued a preliminary audit report recommending a cost disallowance of approximately $0.4 million plus interest for these filing years. There was no opposition from intervenors to the recommendations of the LPSC Staff’s consultant and the report was approved by the LPSC on July 18, 2012. Cleco Power made refunds of $0.4 million plus interest to customers during the September 2012 billing cycle. Cleco Power has fuel adjustment clause filings for the years 2009 through 2011 that remain subject to audit.

Environmental Audit

In July 2009, the LPSC issued Docket No. U-29380 Subdocket A, which provides for an environmental adjustment clause to recover certain costs of environmental compliance as an adder to customers’ bills. The costs eligible for recovery are prudently incurred air emissions credits associated with complying with federal, state, and local air emission regulations that apply to the generation of electricity reduced by the sale of such allowances. Also eligible for recovery are variable emission mitigation costs, which are the cost of reagents such as ammonia and limestone that are used to reduce air emissions. In November 2011, the LPSC initiated an audit of the costs for the period October 2009 through October 2010. The total amount of environmental expenses included in the audit was approximately $11.3 million. In April 2012, the LPSC Staff’s consultant issued a preliminary audit report recommending no cost disallowance for the review period. There was no opposition from intervenors to the recommendations of the LPSC Staff’s consultant and the report was approved by the LPSC on July 18, 2012. Cleco Power has environmental adjustment clause filings for the years 2010 through 2012 that remain subject to audit.

Other

Cleco is involved in various litigation matters, including regulatory, environmental, and administrative proceedings before various courts, regulatory commissions, arbitrators, and governmental agencies regarding matters arising in the ordinary course of business. The liability Cleco may ultimately incur with respect to any one of these matters in the event of a negative outcome may be in excess of amounts currently accrued. Management regularly analyzes current information and, as of ~~September~~March 3031, ~~2012~~2013, believes the probable and reasonably estimable liabilities based on the eventual disposition of these matters is approximately $24.52 million, and has accrued this amount.

CLECO CORPORATION CLECO POWER 2012 3RD QUARTER FORM 10-Q

Off-Balance Sheet Commitments

Cleco Corporation and Cleco Power have entered into various off-balance sheet commitments, in the form of guarantees and standby letters of credit, in order to facilitate their activities and the activities of Cleco Corporation’s subsidiaries and equity investees (affiliates). Cleco Corporation and Cleco Power have also ~~have~~ agreed to contractual terms that require them to pay third parties if certain triggering events occur. These contractual terms generally are defined as guarantees in the authoritative guidance.

Cleco Corporation entered into these off-balance sheet commitments in order to entice desired counterparties to contract with its affiliates by providing some measure of credit assurance to the counterparty in the event Cleco’s affiliates do not fulfill certain contractual obligations. If Cleco Corporation had not provided the off-balance sheet commitments, the desired counterparties may not have contracted with Cleco’s affiliates, or may have contracted with them at terms less favorable to its affiliates.

The off-balance sheet commitments are not recognized on Cleco’s Condensed Consolidated Balance Sheets because management has determined that Cleco’s affiliates are able to perform these obligations under their contracts and that it is not probable that payments by Cleco will be required. Cleco’s off-balance sheet commitments as of ~~September~~March 3031, ~~2012~~2013, are summarized in the following table, and a discussion of the off-balance sheet commitments follows the table. The discussion should be read in conjunction with the table to understand the impact of the off-balance sheet commitments on Cleco’s financial condition.

	AT SEPT. 30, 2012
	AT MAR. 31, 2013
(THOUSANDS)	FACEAMOUNT		REDUCTIONS		NETAMOUNT
Cleco Corporation
Guarantee issued to Entergy Mississippi on behalf of Attala	$	500	$	—	$	500
Cleco Power
Obligations under standby letter of credit issued to the Louisiana Department of Labor	3,725		—		3,725
Total	$	4,225	$	—	$	4,225

In January 2006, Cleco Corporation provided a $0.5 million guarantee to Entergy Mississippi for Attala’s obligations under the Interconnection Agreement. This guarantee will be effective through the life of the agreement.

The State of Louisiana allows employers of certain financial net worth to self-insure their workers’ compensation benefits. Cleco Power has a certificate of self-insurance from the Louisiana Office of Workers’ Compensation and is required ~~to post a $3.7 million letter of credit, an amount equal to 110% of the average losses over the previous three years, as surety.~~



CLECO CORPORATION
CLECO POWER		2013 1ST QUARTER FORM 10-Q

to post a $3.7 million letter of credit, an amount equal to 110% of the average losses over the previous three years, as surety.

Disclosures about Guarantees

Cleco Corporation provided a limited guarantee and an indemnification to Entergy Louisiana and Entergy Gulf States for Perryville’s performance, indemnity, representation, and warranty obligations under the Sale Agreement, the Power Purchase Agreement, and other ancillary agreements related to the sale of the Perryville facility in 2004. This is a continuing guarantee and all obligations of Cleco Corporation shall continue until the guaranteed obligations have been fully performed or otherwise extinguished. The discounted probability-weighted liability under the guarantees and indemnifications recognized on Cleco’s Condensed Consolidated Balance Sheet as of March 31, 2013, was $0.2 million. The maximum amount of the potential payment to Entergy Louisiana and Entergy Gulf States is $42.4 million. Currently, management does not expect to be required to pay Entergy Louisiana and Entergy Gulf States under the guarantee.

Consolidated Balance Sheet as of September 30, 2012, was $0.2 million. The maximum amount of the potential payment to Entergy Louisiana and Entergy Gulf States is $42.4 million. Currently, management does not expect to be required to pay Entergy Louisiana and Entergy Gulf States under the guarantee.

In February 2010, Cleco Power acquired Acadia Unit 1 and half of Acadia Power Station’s related common facilities. Acadia provided limited guarantees and indemnifications to Cleco Power under the Master Reorganization and Redemption Agreement. The maximum amount of the potential payment to Cleco Power for indemnifications is $30.0 million, except for the indemnifications relating to the fundamental organizational structure of Acadia against which there is no maximum amount. Cleco Corporation is obligated to pay a maximum of $10.0 million if Acadia is unable to pay claims to Cleco Power pursuant to the guarantee. Acadia recorded an indemnification liability of $13.5 million which represents the fair value of these indemnifications.

Acadia and APH ~~will~~ reduce the indemnification liabilities ~~either~~ through expiration of the contractual life or through a reduction in the probability of a claim arising. The indemnification obligation ishad ~~expected to have~~ a term of approximately three years. ~~After~~At ~~the~~March ~~three-year~~31, ~~period~~2013, a residual value of less than $0.1 million ~~will remain~~remained. AtDuring ~~September 30, 2012, Acadia had an indemnification liability of approximately $0.4 million remaining, which represents~~ the ~~risk of payment, as a contingent sale obligation recorded on Cleco’s Condensed Consolidated Balance Sheet. APH recognized no income for the~~ three ~~and nine~~ months ended ~~September~~March 3031, ~~2012,~~2013 and no income for the three months ended September 30, 2011, and $0.5 million for the nine months ended September 30, 2011, respectively, primarily due to the contractual expiration of the underlying indemnifications. Acadia recognized no income for the three months ended September 30, 2012, and income of $7.2 million for the nine months ended September 30, 2012, primarily due to the contractual expiration of the underlying indemnifications. During the three and nine months ended September 30, 2011, Acadia recognized income of $1.0.3 million and $17.12 million, respectively, primarily due to the contractual expiration of the underlying indemnifications.

On April 29, 2011, Acadia completed its disposition of Acadia Unit 2 and Acadia Power Station’s remaining common facilities to Entergy Louisiana. Acadia provided limited guarantees and indemnifications to Entergy Louisiana and recorded an indemnification liability of $21.8 million, which represents the fair value of these indemnifications. In conjunction with the disposition of Acadia Unit 2, APH received 100% ownership in Acadia in exchange for its 50% interest in Cajun, and Acadia became a consolidated subsidiary of APH.

Acadia and APH will reduce the indemnification liabilities either through expiration of the contractual life or through a reduction in the probability of a claim arising. The indemnification obligation is expected to have a term of three years. After the three-year period, a residual value of approximately $0.2 million will remain. At September 30, 2012, Acadia had an indemnification liability of $10.0 million remaining, which represents the risk of payment, as a contingent sale obligation recorded on Cleco’s Condensed Consolidated Balance Sheet. Acadia recognized no income for the three months ended September 30, 2012, and $11.8 million for the nine months ended September 30, 2012, primarily due to the contractual expiration of the underlying

41approximately $0.2 million will remain. At March 31, 2013, Acadia had an indemnification liability of $7.8 million remaining, which represents the risk of payment, as a contingent sale obligation recorded on Cleco’s Condensed Consolidated Balance Sheet. Acadia recognized no income for the three months ended March 31, 2013 and March 31, 2012. The maximum amount of the potential payment to Entergy Louisiana for the indemnifications is the purchase price of $298.8 million, except for the liabilities retained by Acadia for which there is no maximum amount. Cleco Corporation is obligated to pay the same maximum amounts as Acadia if Acadia is unable to pay claims to Entergy Louisiana pursuant to the guarantee.

~~CLECO~~As ~~CORPORATION~~part ~~CLECO~~of ~~POWER~~the ~~2012~~Amended ~~3RD~~Lignite ~~QUARTER~~Mining ~~FORM~~Agreement, ~~10-Q~~Cleco Power and SWEPCO, joint owners of Dolet Hills, have agreed to pay the lignite miner’s loan and lease principal obligations when due, if the lignite miner does not have sufficient funds or credit to pay. Any amounts paid on behalf of the miner would be credited by the lignite miner against the next invoice for lignite delivered. At March 31, 2013, Cleco Power had a liability of $3.8 million related to the amended agreement. The maximum projected payment by Cleco Power under this guarantee is estimated to be $72.5 million; however, the Amended Lignite Mining Agreement does not contain a cap. The projection is based on the forecasted loan and lease obligations to be incurred by DHLC, primarily for purchases of equipment. Cleco Power has the right to dispute the incurrence of loan and lease obligations through the review of the mining plan before the incurrence of such loan and lease obligations. The Amended Lignite Mining Agreement does not terminate pursuant to its terms until 2026 and does not affect the amount the Registrants can borrow under their credit facilities. Currently, management does not expect to be required to pay DHLC under the guarantee.

~~indemnifications. The~~In ~~maximum~~its ~~amount~~bylaws, ofCleco ~~the~~Corporation ~~potential~~has ~~payment~~agreed to ~~Entergy~~indemnify ~~Louisiana~~directors, ~~for~~officers, ~~the~~agents, ~~indemnifications~~and isemployees ~~the~~who ~~purchase~~are ~~price~~made ofa ~~$298.8~~party ~~million~~to a pending or completed suit, ~~except~~arbitration, ~~for~~investigation, ~~the~~or ~~liabilities~~other ~~retained~~proceeding bywhether ~~Acadia~~civil, ~~for~~criminal, ~~which~~investigative ~~there~~or isadministrative, noif ~~maximum~~the ~~amount~~basis of inclusion arises as the result of acts conducted in the discharge of their official capacity. Cleco Corporation ishas ~~obligated~~purchased various insurance policies to ~~pay~~reduce the ~~same~~risks ~~maximum~~associated ~~amounts~~with asthe ~~Acadia~~indemnification. In ifits ~~Acadia~~operating isagreement, ~~unable~~Cleco toPower ~~pay~~provides ~~claims~~for tothe ~~Entergy~~same ~~Louisiana~~indemnification ~~pursuant~~as described above with respect to ~~the~~its ~~guarantee~~managers, officers, agents, and employees.

AsGenerally, ~~part~~neither ofCleco ~~the~~Corporation ~~Amended~~nor ~~Lignite Mining Agreement,~~ Cleco Power ~~and~~has ~~SWEPCO,~~recourse ~~joint~~that ~~owners~~would ofenable ~~Dolet~~them ~~Hills, have agreed~~ to ~~pay~~recover ~~the~~amounts ~~lignite~~paid ~~miner’s~~under ~~loan~~their ~~and~~guarantee ~~lease principal obligations when due, if the lignite miner does not have sufficient funds~~ or ~~credit~~indemnification ~~to pay~~obligations. ~~Any~~The ~~amounts~~one ~~paid~~exception onis ~~behalf of~~ the ~~miner~~insurance ~~would~~contracts beassociated ~~credited~~with by the ~~lignite~~indemnification ~~miner~~of ~~against~~directors, ~~the next invoice for lignite delivered. At September 30~~managers, ~~2012~~officers, ~~Cleco Power had a liability of $3.8 million related to the amended agreement. The maximum projected payment by Cleco Power under this guarantee is estimated to be $72.5 million; however~~agents, ~~the~~and ~~Amended Lignite Mining Agreement does not contain a cap~~employees. ~~The~~There ~~projection~~are isno ~~based~~assets onheld ~~the~~as ~~forecasted~~collateral ~~loan~~for ~~and~~third ~~lease~~parties ~~obligations~~that toeither beCleco ~~incurred~~Corporation byor ~~DHLC, primarily for purchases of equipment.~~ Cleco Power ~~has~~could ~~the~~obtain ~~right to dispute the incurrence of loan~~ and ~~lease~~liquidate ~~obligations~~to ~~through~~recover ~~the~~amounts ~~review~~paid ~~of the mining plan before the incurrence of such loan and lease obligations. The Amended Lignite Mining Agreement does not terminate~~ pursuant to ~~its terms until 2026 and does not affect~~ the ~~amount~~guarantees ~~the~~or ~~Registrants~~indemnification ~~can borrow under their credit~~ obligations.

facilities. Currently, management does not expect to be required to pay DHLC under the guarantee.

In its bylaws, Cleco Corporation has agreed to indemnify directors, officers, agents, and employees who are made a party to a pending or completed suit, arbitration, investigation, or other proceeding whether civil, criminal, investigative or administrative, if the basis of inclusion arises as the result of acts conducted in the discharge of their official capacity. Cleco Corporation has purchased various insurance policies to reduce the risks associated with the indemnification. In its operating agreement, Cleco Power provides for the same indemnification as described above with respect to its managers, officers, agents and employees.

Generally, neither Cleco Corporation nor Cleco Power has recourse that would enable them to recover amounts paid under their guarantee or indemnification obligations. The one exception is the insurance contracts associated with the indemnification of directors, managers, officers, agents and employees. There are no assets held as collateral for third parties that either Cleco Corporation or Cleco Power could obtain and liquidate to recover amounts paid pursuant to the guarantees or indemnification obligations.

The following table summarizes the expected termination dates of the off-balance sheet commitments and on-balance sheet guarantees discussed above.

							AT SEPT. 30, 2012
			AMOUNT OF COMMITMENT EXPIRATION PER PERIOD
(THOUSANDS)	NETAMOUNTCOMMITTED		LESS THANONE YEAR		1-3 YEARS		3-5 YEARS		MORETHAN5 YEARS
Off-balance sheet commitments	$	4,225	$	3,725	$	—	$	—	$	500
On-balance sheet guarantees	14,356		—		10,350		—		4,006
Total	$	18,581	$	3,725	$	10,350	$	—	$	4,506



CLECO CORPORATION
CLECO POWER		2013 1ST QUARTER FORM 10-Q



							AT MAR. 31, 2013
			AMOUNT OF COMMITMENT EXPIRATION PER PERIOD
(THOUSANDS)	NET AMOUNT COMMITTED		LESS THAN ONE YEAR		1-3 YEARS		3-5 YEARS		MORE THAN 5 YEARS
Off-balance sheet commitments	$	4,225	$	3,725	$	—	$	—	$	500
On-balance sheet guarantees	12,156		7,250		900		—		4,006
Total	$	16,381	$	10,975	$	900	$	—	$	4,506

Other Commitments

~~New~~NMTC ~~Markets Tax Credits~~Fund

In 2008, Cleco Corporation and US Bancorp Community Development (USBCDC) formed the NMTC Fund. Cleco has a 99.9% membership interest in the NMTC Fund and USBCDC has a 0.1% interest ~~in the NMTC Fund~~. The purpose of the NMTC Fund is to invest in projects located in qualified active low-income communities that are underserved by typical debt capital markets. These investments are designed to generate ~~New~~NMTCs ~~Markets Tax Credits~~ and Historical Rehabilitation tax credits. The NMTC Fund was later amended to include renewable energy investments. The majority of the energy investments qualify for grants under Section 1603 of the American Recovery and Reinvestment Tax Act of 2009. The tax benefits received from the NMTC Fund reduce the federal income tax obligations of Cleco Corporation. In total, Cleco Corporation will contribute $~~285~~283.59 million of equity contributions to the NMTC Fund and will receive at least $~~303~~302.82 million in the form of tax credits, tax losses, capital gains/losses, earnings, and cash over the life of the investment, which ends in 2017. The $18.3 million difference between equity contributions and total benefits received will be recognized over the life of the ~~NMTC~~ Fund as net tax benefits are delivered. The following table reflects remaining future equity contributions.

(THOUSANDS)	CONTRIBUTION
Three months ending Dec. 31, 2012	$	12,786
Nine months ending Dec. 31, 2013	$	38,956
Years ending Dec. 31,
2013	50,822
2014	43,407
2014	39,059
2015	11,870
2015	12,975
2016	7,307
2016	11,890
2017	2,865
2017	3,292
Total	$	104,405
Total	$	130,824

Of the $~~130~~104.84 million, $5149.61 million is due to be paid within the next 12 months. Due to the right of offset, the investment and associated debt are presented on Cleco’s Condensed Consolidated Balance Sheet in the line item titled ~~tax~~Tax credit fund investment, net. The amount of tax benefits delivered in excess of capital contributions as of ~~September~~March 3031, ~~2012~~2013, was $~~104~~98.7 million. The amount of tax benefits delivered but not utilized as of ~~September~~March 3031, ~~2012~~2013, was $86101.56 million and is reflected as a deferred tax asset.

The equity contribution does not contain a stated rate of interest. Cleco Corporation has recorded the liability and investment at its calculated fair value within the framework of the authoritative guidance. In order to calculate the fair value, management used an imputed rate of interest assuming that Cleco Corporation obtained financing of a similar nature from a third- party. The imputed interest rate was used in a net present value model in order to calculate the fair value of the remaining portion of the delayed equity contributions. The following table contains the disclosures required by the

42authoritative guidelines for equity investments with an imputed interest rate.

CLECO CORPORATION CLECO POWER 2012 3RD QUARTER FORM 10-Q



(THOUSANDS)
Equity contributions, imputed interest rate 6%
Principal payment schedule above:	$	104,405
Less: unamortized discount	8,168
Total	$	96,237

~~following~~The ~~table~~gross ~~contains~~investment amortization expense will be recognized over a ten-year period, with five years remaining under the ~~disclosures~~new ~~required~~amendment, byusing the cost method in accordance with the authoritative ~~guidelines~~guidance for ~~equity~~ investments. The ~~with~~grants anreceived ~~imputed~~under ~~interest~~Section ~~rate~~1603, which allow certain projects to receive a federal grant in lieu of tax credits, and other cash reduce the basis of the investment. Periodic amortization of the investment and the deferred taxes generated by the basis reduction temporary difference are included as components of income tax expense.

(THOUSANDS)
Equity contributions, imputed interest rate 6%
Principal payment schedule above:	$	130,824
Less: unamortized discount	12,291
Total	$	118,533

Other

~~The~~Cleco ~~gross~~has ~~investment~~accrued ~~amortization expense will be recognized over a ten-year period, with five years remaining under the new amendment, using the cost method in accordance with the authoritative guidance~~ for ~~investments. The~~liabilities ~~grants~~related ~~received~~to ~~under~~third ~~Section~~parties ~~1603~~ and ~~other~~employee ~~cash~~medical ~~reduce the basis of the investment~~benefits. ~~Periodic amortization of the investment and the deferred taxes generated by the basis reduction temporary difference are included as components of income tax expense.~~

Risks and Uncertainties

Cleco Corporation

Cleco Corporation could be subject to possible adverse consequences if Cleco’s counterparties fail to perform their obligations or if Cleco Corporation or its affiliates are not in compliance with loan agreements or bond indentures.

Other

Changes in the regulatory environment or market forces could cause Cleco to determine its assets have suffered an other-than-temporary decline in value, whereby an impairment would be required to be taken and Cleco’s financial condition could be materially adversely affected.

Cleco Power

Cleco Power supplies the majority of its customers’ electric power requirements from its own generation facilities. In addition to power obtained from power purchase agreements, Cleco Power purchases power from other utilities and marketers to supplement its generation at times of relatively high demand or when the purchase price of power is less than its own cost of generation. Due to its location on the transmission grid, Cleco Power relies on two main suppliers of electric transmission when accessing external power markets. At times, constraints limit the amount of purchased power these transmission providers can deliver into Cleco Power’s service territory.

~~access~~CLECO toCORPORATION ~~the~~CLECO ~~capital~~POWER ~~markets~~2013 at1ST ~~prevailing~~QUARTER ~~market~~FORM rates for companies with comparable credit ratings. Cleco Power pays fees and interest under its bank credit agreements based on the highest rating held. If Cleco Power’s credit ratings were to be downgraded by Moody’s and Standard & Poor’s, Cleco Power would be required to pay additional fees and higher interest rates under its bank credit agreements. Cleco Power’s collateral for derivatives is based on the lowest rating held. If Cleco Power’s credit ratings were to be downgraded by Moody’s or Standard & Poor’s, Cleco Power would be required to pay additional collateral for derivatives.10-Q

marketers to supplement its generation at times of relatively high demand or when the purchase price of power is less than its own cost of generation. Due to its location on the transmission grid, Cleco Power relies on two main suppliers of electric transmission when accessing external power markets. At times, constraints limit the amount of purchased power these transmission providers can deliver into Cleco Power’s service territory.

Access to capital markets is a significant source of funding for both short- and long-term capital requirements not satisfied by operating cash flows. After assessing the current operating performance, liquidity, and credit ratings of Cleco Power, management believes that Cleco Power will have access to the capital markets at prevailing market rates for companies with comparable credit ratings. Cleco Power pays fees and interest under its bank credit agreements based on the highest rating held. If Cleco Power’s credit ratings were to be downgraded by Moody’s or Standard & Poor’s, Cleco Power would be required to pay additional fees and higher interest rates under its bank credit agreements. Cleco Power’s collateral for derivatives is based on the lowest rating held. If Cleco Power’s credit ratings were to be downgraded by Moody’s or Standard & Poor’s, Cleco Power would be required to pay additional collateral for derivatives.

Note 12 — Affiliate Transactions

At ~~September~~March 3031, ~~2012~~2013, Cleco Corporation had no affiliate balances that were payable to or due from its non-consolidated affiliates.

Cleco Power has affiliate balances that are payable to or due from its affiliates. At ~~September~~March 3031, ~~2012~~2013, the payable to Support Group was $5.7 million, the payable to Cleco Corporation was $0.8 million, the payable to Evangeline was $3.5 million, and the payable to other affiliates was less than $0.1 million. Also, at September 30, 2012, the receivable from Support Group was $2.0 million, the receivable from Cleco Corporation was $1.3 million, and the receivable from other affiliates was less than $0.1 million.

~~Note~~Support 13Group —was ~~Acadia~~$5.2 ~~Unit~~million, the payable to Cleco Corporation was $0.4 million, the payable to Evangeline was $1.1 million, and the payable to other affiliates was $0.1 million. At March 31, 2013, the receivable from Support Group was $0.8 million, the receivable from Cleco Corporation was $0.2 ~~Transaction~~million, and the receivable from other affiliates was $0.1 million.

OnNote ~~April~~13 ~~29,~~— ~~2011,~~Storm ~~Acadia completed its disposition of Acadia Unit 2 and Acadia Power Station’s remaining common facilities to Entergy Louisiana. The significant terms of the transaction were:~~Restoration

• Entergy Louisiana acquired Acadia Unit 2 for $298.8 million,

• In exchange for $10.9 million, APH indemnified the third-party owners of Cajun and their affiliates against 50% of Acadia’s liabilities and other obligations related to the Acadia Unit 2 transaction,

• APH recognized a gain of $62.0 million, which included $26.2 million of equity income that represents the 2007 investment impairment charge of $45.9 million, partially offset by $19.7 million of capitalized interest during the construction of Acadia,

• APH received 100% ownership in Acadia in exchange for its 50% interest in Cajun, and Acadia became a consolidated subsidiary of APH, and

• Cleco Power operates Acadia Unit 2 on behalf of Entergy Louisiana.

Following the transaction, ongoing operations at Acadia are minimal, relating only to the previously established accounts receivable, accounts payable, and servicing of indemnities. Therefore, Acadia does not meet the definition of a business.

Note 14 — Storm Restoration

On August 28, 2012, Hurricane Isaac made landfall in south Louisiana as a Category 1 hurricane, causing power outages to approximately 95,000, or 34%, of Cleco Power’s electric customers and affecting Cleco Power’s entire service territory. By September 2, 2012, power was restored to 100% of customers who could receive power.

The ~~current~~cost ~~estimate~~of restoration for Hurricane Isaac was $24.3 million. The damage to equipment from the storm required replacement, as well as repair of existing assets. Therefore, the ~~cost~~balance sheets of Cleco and Cleco Power reflect the capitalization of approximately 56.0% of the restoration ~~for~~costs ~~Hurricane~~recorded ~~Isaac~~at isMarch 31, 2013, or approximately $2113.46 million. The remaining cost was offset against Cleco Power’s existing storm damage reserve.

43Note 14 — Accumulated Other Comprehensive Loss

~~CLECO~~The ~~CORPORATION~~components ~~CLECO~~of ~~POWER~~accumulated ~~2012~~other ~~3RD~~comprehensive ~~QUARTER~~loss ~~FORM~~are ~~10-Q~~summarized in the following tables for Cleco and Cleco Power. Where applicable, transactions are reported net of income taxes.

to equipment from the storm required replacement, as well as repair of existing assets. Therefore, the balance sheets of Cleco and Cleco Power reflect the capitalization of approximately 61.8% of the restoration costs recorded at September 30, 2012, or approximately $13.2 million. The remaining cost was offset against Cleco Power’s existing storm damage reserve.



Cleco
(THOUSANDS)	NET (LOSS) GAIN ON PRIOR SERVICE COST			POSTRETIREMENT BENEFIT NET LOSS			NET (LOSS) GAIN ON CASH FLOW HEDGES			TOTAL ACCUMULATED OTHER COMPREHENSIVE (LOSS) GAIN
Balances, December 31, 2012	$	(6,495	)	$	(18,246	)	$	(7,629	)	$	(32,370	)
Other comprehensive income before reclassifications:
Net derivative gain (net of tax expense of $848)	—			—			1,355			1,355
Amounts reclassified from accumulated other comprehensive income:
Amortization of postretirement benefit net loss (net of tax expense of $336)	536			—			—			536
Reclassification of net loss to interest charges (net of tax expense of $8)	—			—			12			12
Reclassification of ineffectiveness to regulatory asset (net of tax benefit of $20)	—			—			(30		)	(30		)
Net current-period other comprehensive income	536			—			1,337			1,873
Balances, March 31, 2013	$	(5,959	)	$	(18,246	)	$	(6,292	)	$	(30,497	)

Note 15 — Subsequent Event



Cleco Power
(THOUSANDS)	NET (LOSS) GAIN ON PRIOR SERVICE COST			POSTRETIREMENT BENEFIT NET LOSS			NET (LOSS) GAIN ON CASH FLOW HEDGES			TOTAL ACCUMULATED OTHER COMPREHENSIVE (LOSS) GAIN
Balances, December 31, 2012	$	(4,227	)	$	(8,565	)	$	(7,629	)	$	(20,421	)
Other comprehensive income before reclassifications:
Net derivative gain (net of tax expense of $848)	—			—			1,355			1,355
Amounts reclassified from accumulated other comprehensive income:
Amortization of postretirement benefit net loss (net of tax expense of $157)	251			—			—			251
Reclassification of net loss to interest charges (net of tax expense of $8)	—			—			12			12
Reclassification of ineffectiveness to regulatory asset (net of tax benefit of $20)	—			—			(30		)	(30		)
Net current-period other comprehensive income	251			—			1,337			1,588
Balances, March 31, 2013	$	(3,976	)	$	(8,565	)	$	(6,292	)	$	(18,833	)

On October 30, 2012, Cleco Power announced Evangeline as the winning bidder in Cleco Power's 2012 Long-Term RFP, subject to further due diligence, the completion of definitive agreements, and regulatory approvals from the LPSC and FERC. The transaction is a transfer of ownership and control of Coughlin Power Station from Evangeline to Cleco Power. The transaction is expected to be closed in the third quarter of 2013, after the completion of regulatory reviews.36

~~ITEM~~CLECO 2.CORPORATION ~~MANAGEMENT'S~~CLECO ~~DISCUSSION~~POWER ~~AND~~2013 ~~ANALYSIS~~1ST OFQUARTER ~~FINANCIAL~~FORM ~~CONDITION AND RESULTS OF OPERATIONS~~10-Q

~~The~~ITEM ~~following~~2. ~~discussion and analysis should be read in combination with the Registrants~~MANAGEMENT’S ~~Combined~~DISCUSSION ~~Annual~~AND ~~Report~~ANALYSIS onOF ~~Form~~FINANCIAL ~~10-K~~CONDITION ~~for~~AND ~~the~~RESULTS ~~fiscal~~OF year ended December 31, 2011, and Cleco and Cleco Power’s Condensed Consolidated Financial Statements contained in this Combined Quarterly Report on Form 10-Q. The information included therein is essential to understanding the following discussion and analysis. Below is information concerning the consolidated results of operations of Cleco for the three and nine months ended September 30, 2012 and September 30, 2011.OPERATIONS

The following discussion and analysis should be read in combination with the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and Cleco and Cleco Power’s Condensed Consolidated Financial Statements contained in this Combined Quarterly Report on Form 10-Q. The information included therein is essential to understanding the following discussion and analysis. Below is information concerning the consolidated results of operations of Cleco for the three months ended March 31, 2013 and March 31, 2012.

RESULTS OF OPERATIONS

Overview

Cleco is a regional energy company that conducts substantially all of its business operations through its two primary subsidiaries:

• Cleco Power, a regulated electric utility company, which owns 9 generating units with a total nameplate capacity of 2,~~524~~565 MW and serves approximately ~~281~~283,000 customers in Louisiana through its retail business and 10 communities across Louisiana and Mississippi through wholesale power contracts and


•	Midstream, a wholesale energy business, which owns Evangeline (which operates Coughlin).

Cleco Power

Many factors affect Cleco Power’s primary business of selling electricity. These factors include the presence of a stable regulatory environment, which ~~can~~impacts ~~impact~~ cost recovery and return on equity, as well as the recovery of costs related to growing energy demand and rising fuel prices; the ability to increase energy sales while containing costs; and the ability to meet increasingly stringent regulatory and environmental standards. Key initiatives that Cleco Power is currently working on include the ~~Acadiana~~completion ~~Load~~of ~~Pocket~~the AMI project, completion of the ~~AMI~~transfer ~~project~~of ownership and ~~long-term~~control ~~power~~of ~~supply~~Coughlin ~~options~~from ~~beyond~~Evangeline, ~~2012~~extension of its current FRP, and integration into MISO. These initiatives are discussed below.

Acadiana Load Pocket Project

In September 2008, Cleco Power entered into an agreement with two other utilities to upgrade and expand interconnected transmission systems in south central Louisiana in an area known as the Acadiana Load Pocket. The project received LPSC and SPP approval in February 2009. Cleco Power’s estimated cost for its portion of the project is $125.0 million, including AFUDC. As of September 30, 2012, Cleco Power had spent $119.6 million on the project. A return on and recovery of the costs associated with the completed portions of the Acadiana Load Pocket project are included in base

revenue. The project was substantially completed by the end of June 2012. Remaining portions of the project are expected to be complete by December 2012. For information on the impact the Acadiana Load Pocket project is expected to have on base revenue, see “— Comparison of the Three Months Ended September 30, 2012 and 2011 — Cleco Power — Base.”

AMI Project

In May 2010, Cleco Power accepted the terms of a $20.0 million grant from the DOE under the DOE’s small-grant process to implement advanced metering technology for all of Cleco Power’s retail customers. Cleco Power estimates the project will cost $73.0 million, with the DOE grant providing $20.0 million toward the project and Cleco Power providing the remaining $53.0 million. The grant program is a part of the American Recovery and Reinvestment Act of 2009, an economic stimulus package passed by Congress in February 2009. Advanced metering technology includes the installation of electric meters that enable two-way communication capabilities between a ~~home~~utility orcustomer ~~business~~ and athe utility ~~company~~. At ~~September~~March 3031, ~~2012~~2013, Cleco Power had incurred $4567.4 million in project costs, of which $20.0 million has been ~~submitted~~reimbursed toby the DOE ~~for reimbursement~~. AsThe installation of ~~September 30, 2012, Cleco Power had received $18.5 million in payments from~~ the ~~DOE. The~~advanced ~~project~~meters is expected to be completed in the ~~third~~second ~~quarter~~half of 2013. For more information on the AMI Project, see "“— Financial Condition — Regulatory and Other Matters — AMI Project."”

Power Supply Options/Coughlin Transfer from Midstream

Cleco Power iscontinues ~~evaluating a range of long-term power supply options beyond 2012. Cleco Power is continuing~~ to update its IRP to look at future sources of supply to meet its capacity and energy requirements and to comply with new environmental standards. In August 2011, Cleco Power issued an RFP for resources to enhance reliability for January through April 2012 and selected and negotiated two agreements from the RFP, a power purchase agreement with NRG Power Marketing LLC and a tolling agreement with Evangeline. Both agreements began on January 1, 2012, and ended on April 30, 2012. In October 2011, a second RFP, seeking up to approximately 750 MW of capacity and energy, for a three- or five-year period was issued for supply starting May 1, 2012. Cleco Power selected Evangeline’s proposal for a 730-MW product beginning May 1, 2012, and ending April 30, 2015. The definitive agreement between Evangeline and Cleco Power was executed in January 2012 and approved by the LPSC in March 2012 and FERC in April 2012. In May 2012, Cleco Power issued a draft RFP seeking long-term resources beyond April 2015. The final RFP was issued in July 2012 and proposals were received from potential suppliers in August 2012. On October 30, 2012, Cleco Power announced Evangeline as the winning bidder in Cleco Power’s 2012 Long-Term RFP. In December 2012, Cleco Power and Evangeline executed definitive agreements to transfer ownership and control of Coughlin from Evangeline to Cleco Power. Cleco Power's application seeking regulatory approval is listed in the LPSC's Official Bulletin, dated April 12, 2013. Cleco Power is expected to subsequently file, in May 2013, its application with FERC seeking authorization to acquire Coughlin. The transaction is expected to close on or by April 30, 2014, following regulatory approvals by both the LPSC and FERC.

44Extension of FRP

~~CLECO~~In ~~CORPORATION~~April ~~CLECO~~2013, ~~POWER~~Cleco ~~2012~~Power ~~3RD~~filed ~~QUARTER~~an ~~FORM~~application ~~10-Q~~with the LPSC to extend its current FRP and to seek rate recovery of the Coughlin asset. Cleco Power requested in its application that the FRP extension be effective through June 2020.

from potential suppliers in August 2012. On October 30, 2012, Cleco Power announced Evangeline as the winning bidder in Cleco Power's 2012 Long-Term RFP. For more information on Cleco Power's RFPs, see “— Financial Condition — Regulatory and Other Matters — Generation RFP” and Item 1, "Notes to the Unaudited Condensed Consolidated Financial Statements — Note 15 — Subsequent Event."MISO

Cleco Power’s transmission system is heavily interconnected with Entergy’s system; therefore, Cleco Power plans to follow Entergy and join MISO in December 2013. On December 6, 2012, Cleco Power filed an application with the LPSC indicating Cleco’s intent to join MISO, asking the LPSC to find that transferring control of certain transmission assets to MISO is in the public interest, to create an accounting order deferring costs related to Cleco Power’s transition into the MISO market, and to expedite treatment. The current procedural schedule anticipates a final order from the LPSC on Cleco Power’s application by mid-year 2013.

Cleco Midstream

Evangeline

~~In March 2010,~~ Evangeline restructured its tolling agreement with JPMVEC and shortened the expiration of the prior long-term agreement from 2020 to December 31, 2011 (with a JPMVEC option to extend one year). JPMVEC did not exercise the option to extend the tolling agreement and as a result, Coughlin’s capacity and energy became available to Midstream beginning January 1, 2012. Evangeline was one of the successful bidders in Cleco Power’s RFP for short-term 2012 resources beginning January 1, 2012, and began providing 250 MW of capacity and energy to Cleco Power under a tolling agreement through April 30, 2012. In addition to Cleco Power’s RFP referenced above, in December 2011, Evangeline was also notified that Cleco Power selected its proposal to fulfill Cleco Power’s capacity and energy needs as defined in the Cleco Power RFP for contractual resources beginning in 2012. The proposal was for a 730-MW product beginning May 1, 2012 and ending April 30, 2015. The definitive agreement between Evangeline and Cleco Power was executed in January 2012 and was approved by the LPSC in March 2012 and FERC in April 2012. Midstream has been marketing Coughlin’s capacity for periods beginning after April 30, 2015, and has been evaluating various options to optimize Coughlin’s value. On October 30, 2012, Cleco Power announced that Evangeline was the winning bidder in Cleco Power's 2012 Long-Term RFP. For more information, see “— Financial Condition — Regulatory and Other Matters — Generation RFP” and Item 1, "Notes to the Unaudited Condensed Consolidated Financial Statements — Note 15 — Subsequent Event."

~~Comparison of the Three Months Ended September 30, 2012 and 2011~~ 37

Cleco Consolidated
	FOR THE THREE MONTHS ENDED SEPT. 30,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2012		2011			VARIANCE			CHANGE
Operating revenue, net	$	297,372	$	351,581		$	(54,209	)	(15.4	)%
Operating expenses	194,025		236,081			42,056			17.8	%
Operating income	$	103,347	$	115,500		$	(12,153	)	(10.5	)%
Allowance for other funds used during construction	$	1,882	$	902		$	980		108.6	%
Other expense	$	1,232	$	2,680		$	1,448		54.0	%
Interest charges	$	21,966	$	25,779		$	3,813		14.8	%
Federal and state income taxes	$	20,179	$	24,737		$	4,558		18.4	%
Net income applicable to common stock	$	63,818	$	65,842		$	(2,024	)	(3.1	)%



CLECO CORPORATION
CLECO POWER		2013 1ST QUARTER FORM 10-Q

~~Consolidated~~its ~~net~~proposal ~~income~~to ~~applicable~~fulfill toCleco ~~common~~Power’s ~~stock~~capacity ~~decreased~~and ~~$2.0~~energy ~~million,~~needs oras 3defined in the Cleco Power RFP for contractual resources beginning in 2012. The proposal was for a 730-MW product beginning May 1%, in2012, ~~the~~and ~~third~~ending ~~quarter~~April of30, 2015. The definitive agreement between Evangeline and Cleco Power was executed in January 2012 ~~compared~~and towas approved by the ~~third~~LPSC ~~quarter~~in ofMarch ~~2011~~2012 ~~primarily~~and ~~due~~FERC toin ~~lower~~April 2012. Midstream was marketing Coughlin’s capacity for periods beginning after April 30, 2015, and ~~corporate~~had ~~earnings~~been evaluating various options to optimize Coughlin’s value. On ~~Partially~~October ~~offsetting~~30, ~~this~~2012, ~~decrease~~Cleco Power announced that Evangeline was ~~higher~~the winning bidder in Cleco Power’s ~~earnings~~2012 Long-Term RFP. In December 2012, Cleco Power and Evangeline executed definitive agreements to transfer ownership and control of Coughlin from Evangeline to Cleco Power. For more information, see “— Financial Condition — Regulatory and Other Matters — Generation RFP.”

~~Operating~~Comparison ~~revenue,~~of ~~net~~the ~~decreased~~Three ~~$54.2~~Months ~~million,~~Ended ~~or 15.4%~~March 31, in2013 ~~the~~and ~~third quarter of~~ 2012 ~~compared to the third quarter of 2011 largely as a result of lower fuel cost recovery revenue at Cleco Power.~~

Operating expenses decreased $42.1 million, or 17.8%, in the third quarter of 2012 compared to the third quarter of 2011 primarily due to lower per unit costs and volumes of fuel used for electric generation.



Cleco Consolidated
	FOR THE THREE MONTHS ENDED MAR. 31,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2013		2012			VARIANCE			CHANGE
Operating revenue, net	$	240,947	$	222,773		$	18,174		8.2	%
Operating expenses	182,480		168,479			(14,001		)	(8.3	)%
Operating income	$	58,467	$	54,294		$	4,173		7.7	%
Other income	$	2,273	$	9,375		$	(7,102	)	(75.8	)%
Interest charges	$	21,456	$	20,624		$	(832	)	(4.0	)%
Federal and state income taxes	$	13,081	$	13,410		$	329		2.5	%
Net income applicable to common stock	$	27,133	$	30,031		$	(2,898	)	(9.7	)%

~~Allowance~~Consolidated ~~for~~net ~~funds~~income ~~used~~applicable ~~during~~to ~~construction~~common ~~increased~~stock decreased $12.09 million, or ~~108~~9.67%, in the ~~third~~first quarter of ~~2012~~2013 compared to the ~~third~~first quarter of ~~2011~~2012 primarily due to ~~higher AFUDC related to the AMI Project and miscellaneous transmission projects, partially offset by~~ lower ~~amounts~~Midstream ~~from the Acadiana Load Pocket Project~~ and ~~the~~corporate ~~absence~~earnings. ofPartially ~~amounts~~offsetting ~~related~~this todecrease ~~the~~was ~~completion~~higher ofCleco ~~Teche~~Power ~~Unit 4~~earnings.

~~Other~~Operating ~~expense~~revenue, ~~decreased~~net increased $118.42 million, or 548.02%, in the ~~third~~first quarter of ~~2012~~2013 compared to the ~~third~~first quarter of ~~2011~~2012 largely as a result of anhigher ~~increase~~base inrevenue ~~the~~and ~~cash~~fuel ~~surrender~~cost ~~value~~recovery ofrevenue ~~life insurance policies~~ at Cleco ~~Corporation~~Power.

~~Interest~~Operating ~~charges~~expenses ~~decreased~~increased $314.80 million, or ~~14.~~8.3%, ~~during~~in the ~~third~~first quarter of ~~2012~~2013 compared to the ~~third~~first quarter of ~~2011~~2012 primarily due to ~~lower~~higher ~~interest~~per ~~charges~~unit costs and volumes of fuel used for electric generation, higher taxes other than income taxes, and higher depreciation at Cleco Power. Also contributing to the increase was higher maintenance expenses and losses on disposal of assets at Evangeline resulting from spring outage expenses.

~~Federal~~Other ~~and state~~ income ~~taxes~~ decreased $47.61 million, or 1875.48%, during the ~~third~~first quarter of ~~2012~~2013 compared to the ~~third~~first quarter of ~~2011~~2012 primarily due to ~~$2.9~~the ~~million~~decrease ~~for~~of the ~~change~~contractual inlife ~~pre-tax~~of ~~income~~an ~~excluding~~underlying ~~AFUDC~~indemnification ~~equity,~~resulting ~~$2.9~~from ~~million for a favorable settlement with taxing authorities, $2.7 million for tax credits, and $0.4 million for miscellaneous items. These decreases were partially offset by $3.1 million for~~ the ~~tax~~acquisition ~~returns~~of ~~filed~~Acadia ~~and~~Unit $1.2 ~~million~~by toCleco ~~record tax expense at the projected annual effective tax rate~~Power.

Interest charges increased $0.8 million, or 4.0%, during the first quarter of 2013 compared to the first quarter of 2012 primarily due to uncertain tax positions related to the absence of a favorable settlement recorded in the first quarter of 2012.

Federal and state income taxes decreased $0.3 million, or 2.5%, during the first quarter of 2013 compared to the first quarter of 2012 primarily due to decreases of $1.3 million for the change in pre-tax income excluding AFUDC equity and

$0.8 million to record tax expense at the projected annual effective tax rate. These decreases were partially offset by $0.9 million for tax credits and $0.9 million for miscellaneous tax items.

Results of operations for Cleco Power and Midstream are more fully described below.



Cleco Power
	FOR THE THREE MONTHS ENDED MAR. 31,
						FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2013			2012			VARIANCE			CHANGE
Operating revenue
Base	$	138,203		$	129,332		$	8,871		6.9	%
Fuel cost recovery	91,222			80,258			10,964			13.7	%
Electric customer credits	(21		)	2,237			(2,258		)	(100.9	)%
Other operations	11,038			10,448			590			5.6	%
Affiliate revenue	336			345			(9		)	(2.6	)%
Operating revenue, net	240,778			222,620			18,158			8.2	%
Operating expenses
Fuel used for electric generation – recoverable	84,536			72,678			(11,858		)	(16.3	)%
Power purchased for utility customers – recoverable	6,690			7,580			890			11.7	%
FAC non-recoverable fuel and power purchased	3,832			2,677			(1,155		)	(43.1	)%
Other operations	25,373			26,343			970			3.7	%
Maintenance	14,794			16,014			1,220			7.6	%
Depreciation	32,330			30,090			(2,240		)	(7.4	)%
Taxes other than income taxes	11,458			8,932			(2,526		)	(28.3	)%
Total operating expenses	179,013			164,314			(14,699		)	(8.9	)%
Operating income	$	61,765		$	58,306		$	3,459		5.9	%
Interest charges	$	21,349		$	18,486		$	(2,863	)	(15.5	)%
Federal and state income taxes	$	14,238		$	14,507		$	269		1.9	%
Net income	$	27,793		$	26,805		$	988		3.7	%

~~CLECO~~Cleco ~~CORPORATION~~Power’s ~~CLECO~~net ~~POWER~~income ~~2012~~in ~~3RD~~the ~~QUARTER~~first ~~FORM~~quarter ~~10-Q~~of 2013 increased $1.0 million, or 3.7%, compared to the first quarter of 2012. Contributing factors include:

Cleco Power
	FOR THE THREE MONTHS ENDED SEPT. 30,
							FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2012			2011				VARIANCE			CHANGE
Operating revenue
Base	$	180,276		$	178,159			$	2,117		1.2	%
Fuel cost recovery	102,618			146,373				(43,755		)	(29.9	)%
Electric customer credits	(930		)	1,852				(2,782		)	(150.2	)%
Other operations	14,905			15,565				(660		)	(4.2	)%
Affiliate revenue	343			347				(4		)	(1.2	)%
Operating revenue, net	297,212			342,296				(45,084		)	(13.2	)%
Operating expenses
Fuel used for electric generation – recoverable	78,902			121,739				42,837			35.2	%
Power purchased for utility customers – recoverable	23,706			24,627				921			3.7	%
Non-recoverable fuel and power purchased	10,347			1,881				(8,466		)	(450.1	)%
Other operations	29,063			30,451				1,388			4.6	%
Maintenance	16,095			15,768				(327		)	(2.1	)%
Depreciation	33,199			29,539				(3,660		)	(12.4	)%
Taxes other than income taxes	8,390			8,802				412			4.7	%
Gain on sale of assets	—			(6		)		(6		)	(100.0	)%
Total operating expenses	199,702			232,801				33,099			14.2	%
Operating income	$	97,510		$	109,495			$	(11,985	)	(10.9	)%
Allowance for other funds used during construction	$	1,882		$	902			$	980		108.6	%
Interest charges	$	21,962		$	25,306			$	3,344		13.2	%
Federal and state income taxes	$	19,740		$	31,656			$	11,916		37.6	%
Net income	$	57,783		$	53,833			$	3,950		7.3	%

Cleco Power’s net income in the third quarter of 2012 increased $4.0 million, or 7.3%, compared to the third quarter of 2011. Contributing factors include:

•lower interest charges,

•higher base revenue,

•lower other operations and maintenance expenses, and

• higher ~~allowance for~~ other ~~funds~~operations ~~used during construction, and~~revenue.

•lower effective income tax rate.

These factors were partially offset by:

•higher ~~non-recoverable~~interest ~~fuel and power purchased~~charges,

•higher ~~depreciation~~taxes ~~expense~~other than income taxes,

•higher electric customer credits, ~~and~~

•~~lower~~higher ~~other~~depreciation ~~operations~~expense, ~~revenue.~~and

	FOR THE THREE MONTHS ENDED SEPT. 30,
(MILLION kWh)	2012		2011		FAVORABLE/(UNFAVORABLE)
Electric sales
Residential	1,202		1,274		(5.7	)%
Commercial	784		796		(1.5	)%
Industrial	582		619		(6.0	)%
Other retail	36		36		—
Total retail	2,604		2,725		(4.4	)%
Sales for resale	616		652		(5.5	)%
Unbilled	(69	)	(129	)	46.5	%
Total retail and wholesale customer sales	3,151		3,248		(3.0	)%

•higher FAC non-recoverable fuel and power purchased.

	FOR THE THREE MONTHS ENDED SEPT. 30,
(THOUSANDS)	2012			2011			FAVORABLE/(UNFAVORABLE)
Electric sales
Residential	$	96,954		$	99,144		(2.2	)%
Commercial	50,145			48,732			2.9	%
Industrial	21,993			22,468			(2.1	)%
Other retail	2,669			2,600			2.7	%
Surcharge	1,950			2,983			(34.6	)%
Other	(1,566		)	(1,578		)	0.8	%
Total retail	172,145			174,349			(1.3	)%
Sales for resale	12,459			11,455			8.8	%
Unbilled	(4,328		)	(7,645		)	43.4	%
Total retail and wholesale customer sales	$	180,276		$	178,159		1.2	%



CLECO CORPORATION
CLECO POWER		2013 1ST QUARTER FORM 10-Q



	FOR THE THREE MONTHS ENDED MAR. 31,
(MILLION kWh)	2013		2012		FAVORABLE/ (UNFAVORABLE)
Electric sales
Residential	840		784		7.1	%
Commercial	582		570		2.1	%
Industrial	555		550		0.9	%
Other retail	33		32		3.1	%
Total retail	2,010		1,936		3.8	%
Sales for resale	441		390		13.1	%
Unbilled	(63	)	(88	)	28.4	%
Total retail and wholesale customer sales	2,388		2,238		6.7	%



	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2013			2012			FAVORABLE/ (UNFAVORABLE)
Electric sales
Residential	$	61,700		$	56,390		9.4	%
Commercial	44,049			41,747			5.5	%
Industrial	21,125			20,092			5.1	%
Other retail	2,566			2,360			8.7	%
Surcharge	2,237			2,815			(20.5	)%
Other	(1,565		)	(1,555		)	(0.6	)%
Total retail	130,112			121,849			6.8	%
Sales for resale	12,279			11,785			4.2	%
Unbilled	(4,188		)	(4,302		)	2.6	%
Total retail and wholesale customer sales	$	138,203		$	129,332		6.9	%

Cleco Power’s residential customers’ demand for electricity largely is affected by weather. Weather generally is measured in cooling-degree days and heating-degree days. A cooling-degree day is an indication of the likelihood that a consumer will use air conditioning, while a heating-degree day is an indication of the likelihood that a consumer will use heating. An increase in heating-degree days does not produce the same increase in revenue as an increase in cooling-degree days, because alternative heating sources are more available and because winter energy is priced below the rate charged for energy used in the summer. Normal heating-degree days and cooling-degree days are calculated for a month by separately calculating the average actual heating- and cooling-degree days for that month over a period of 30 years.

The following table shows how cooling- ~~degree~~and heating-degree days varied from normal conditions and from the prior period. Cleco Power uses weather data provided by the National Oceanic and Atmospheric Administration to determine degree days.

	FOR THE THREE MONTHS ENDED SEPT. 30,
	FOR THE THREE MONTHS ENDED MAR. 31,
				2012 CHANGE
				2013 CHANGE
	2012	2011	NORMAL	PRIOR YEAR		NORMAL
	2013	2012	NORMAL	PRIOR YEAR		NORMAL
Cooling-degree days	1,560	1,671	1,511	(6.6	)%	3.2	%
Heating-degree days	791	491	898	61.1	%	(11.9	)%
Cooling-degree days	64	251	79	(74.5	)%	(19.0	)%

Base

Base revenue increased $28.19 million, or 16.29%, during the ~~third~~first quarter of ~~2012~~2013 compared to the ~~third~~first quarter of ~~2011~~2012 primarily due to favorable weather, which resulted in an approximate $5.3 million increase, and an annual rate adjustment associated with Cleco'’s FRP, which resulted in an approximate $3.6 million increase to base revenue.

Cleco Power expects to begin providing service to expansions of current customers’ operations, as well as service to new ~~industrial~~retail ~~load~~customers. These expansions of service to becurrent ~~added~~customers ~~during~~and service to new customers are expected to contribute additional base revenue of $2.0 million for the remainder of ~~2012~~2013, an additional $1.6 million in 2014, and an additional $3.4 million in 2015. Cleco Power also anticipates additional base revenue for the remainder of 2013 of approximately $5.5 million associated with the implementation of a FERC formula rate methodology for transmission services, ~~primarily~~$0.5 ~~driven~~million byassociated ~~expected~~with ~~development~~the Acadiana Load Pocket transmission project, and $1.7 million associated with the recovery of ~~Haynesville~~expenditures ~~shale~~for ~~discovered~~compliance inwith ~~northwestern~~anticipated ~~Louisiana~~environmental laws. InFor ~~addition,~~information on the effects of future energy sales on Cleco Power’s ~~expects~~financial tocondition, ~~begin~~results ~~providing~~of ~~service~~operations, toand ~~expansions~~cash offlows, ~~current~~see ~~customers~~“Risk Factors — Future Electricity Sales” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

CLECO CORPORATION CLECO POWER 2012 3RD QUARTER FORM 10-Q

operations, as well as service to new customers. These expansions of service to current customers and service to new customers are expected to contribute base revenue of $0.8 million during the remainder of 2012 and an additional $1.3 million in 2013, $0.6 million in 2014 and $5.3 million in 2015. Cleco Power also anticipates up to an additional $1.0 million of base revenue for the remainder of 2012 associated with the completed portions of the Acadiana Load Pocket transmission project. For information on the effects of future energy sales on Cleco Power’s financial condition, results of operations, and cash flows, see “Risk Factors — Future Electricity Sales” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

Fuel Cost Recovery

Fuel cost recovery revenue billed to customers ~~decreased~~increased $4311.80 million, or 2913.97%, during the ~~third~~first quarter of ~~2012~~2013 compared to the ~~third~~first quarter of ~~2011~~2012 primarily due to ~~decreases~~increases in the per-unit cost of fuel used for electric generation and power purchased for utility customers. Also contributing to the ~~decrease~~increase were ~~lower~~higher volumes of fuel used for electric generation. Partially offsetting the ~~decrease~~increase were ~~higher~~lower volumes of power purchased for utility customers. Changes in fuel costs historically have not significantly affected Cleco Power’s net income. Generally, fuel and purchased power expenses are recovered through the LPSC-established fuel adjustment clause, which enables Cleco Power to pass on to its customers substantially all such charges. Approximately 8988% of Cleco Power’s total fuel cost during the ~~third~~first quarter of ~~2012~~2013 was regulated by the LPSC, while the remainder was regulated by FERC. Recovery of fuel adjustment clause costs is subject to refund until approval is received from the LPSC.

Electric Customer Credits

Electric customer credits increased $2.83 million, or ~~150~~100.29%, during the ~~third~~first quarter of ~~2012~~2013 compared to the ~~third~~first quarter of ~~2011~~2012 primarily due to the absence of athe ~~2011~~reversals ~~decrease~~of in the ~~customer~~2012 ~~credit~~cycle accrual and ~~an increase in~~ the ~~current~~fuel ~~year~~audit ~~estimated accrual~~reserves. For more information on the accrual for electric customer credits, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 9 — Electric Customer Credits.”

Other Operations

Other operations revenue ~~decreased~~increased $0.76 million, or 45.26%, in the ~~third~~first quarter of ~~2012~~2013 compared to the ~~third~~first quarter of ~~2011~~2012 primarily due to $42.1 million ~~related~~of toadditional ~~lower~~transmission ~~mineral~~and ~~lease~~distribution ~~payments,~~revenue ~~$1.3~~due ~~million related~~ to ~~the~~implementation ~~absence~~ of aincreased ~~gain~~transmission onrates. This ~~the~~increase ~~sale~~was ofpartially ~~Cleco~~offset ~~Power’s~~by ~~fuel oil inventory and~~ $01.42 million ~~related~~of tolower ~~other~~mineral ~~miscellaneous~~lease ~~revenue. Partially~~payments ~~offsetting~~and ~~these amounts was~~ $50.13 million ~~related~~of tolower another ~~increase~~miscellaneous ~~in wholesale power sales~~revenue.

Operating Expenses

Operating expenses ~~decreased~~increased $3314.17 million, or 148.29%, in the ~~third~~first quarter of ~~2012~~2013 compared to the ~~third~~first quarter of ~~2011~~2012. Fuel used for electric generation (recoverable) ~~decreased~~increased $4211.89 million, or 3516.23%, primarily due to ~~lower~~higher per unit costs and volumes of fuel used for electric generation as compared to the third quarter of 2011. Power purchased for utility customers (recoverable) decreased $0.9 million, or 3.7%, largely due to lower per unit costs of purchased power. Partially offsetting this decrease was higher volumes of

purchased power. Fuel used for electric generation and power purchased for utility customers generally are influenced by natural gas prices, as well as availability of transmission. However, other factors such as scheduled and/or unscheduled outages, unusual maintenance or repairs, or other developments may affect fuel used for electric generation and power purchased for utility customers. Non-recoverable fuel and power purchased increased $8.5 million, or 450.1%, primarily due to higher non-recoverable wholesale power capacity costs. Other operations expense decreased $1.4 million, or 4.6%, primarily due to lower employee and payroll benefit expenses. Depreciation expense increased $3.7 million, or 12.4%, primarily due to the reclassification of the Acadia acquisition adjustment amortization and normal recurring additions to fixed assets.39

~~Allowance~~CLECO ~~for~~CORPORATION ~~Other~~CLECO ~~Funds~~POWER ~~Used~~2013 ~~During~~1ST ~~Construction~~QUARTER FORM 10-Q

~~Allowance~~the first quarter of 2012. Power purchased for utility customers (recoverable) decreased $0.9 million, or 11.7%, largely due to lower volumes of purchased power. Partially offsetting this decrease was higher per unit costs of purchased power. Fuel used for electric generation and power purchased for utility customers generally are influenced by natural gas prices as well as availability of transmission. However, other ~~funds~~factors such as scheduled and/or unscheduled outages, unusual maintenance or repairs, or other developments may affect fuel used ~~during~~for ~~construction~~electric generation and power purchased for utility customers. FAC non-recoverable fuel and power purchased increased $1.02 million, or ~~108~~43.61%, ~~during~~primarily ~~the~~due ~~third~~to ~~quarter~~higher ofnon-recoverable ~~2012~~wholesale ~~compared~~power tocapacity ~~the~~costs. Other ~~third~~operations ~~quarter~~expense ofdecreased ~~2011~~$1.0 million, or 3.7%, primarily due to ~~higher~~lower ~~AFUDC~~generation ~~accruals~~and ~~related~~customer toservice ~~the~~expenses. Maintenance ~~AMI~~expense ~~Project~~decreased ~~and~~$1.2 ~~miscellaneous~~million, ~~transmission~~or ~~projects~~7.6%, ~~partially~~primarily ~~offset~~due byto lower ~~amounts~~generation, ~~from~~transmission ~~the~~and ~~Acadiana~~distribution ~~Load~~expenses. Depreciation ~~Pocket~~expense ~~Project~~increased ~~and~~$2.2 ~~the~~million, ~~absence~~or of7.4%, ~~accruals~~primarily ~~related~~due to amortization of the ~~completion~~Evangeline ofcapacity ~~Teche~~costs ~~Unit~~and 4normal recurring additions to fixed assets. Taxes other than income taxes increased $2.5 million, or 28.3%, primarily due to higher property taxes.

Interest Charges

Interest charges ~~decreased~~increased $32.39 million, or 1315.25%, during the ~~third~~first quarter of ~~2012~~2013 compared to the ~~third~~first quarter of ~~2011~~2012 primarily due to increases of $24.30 million related to ~~reacquired~~uncertain ~~debt~~tax inpositions ~~October~~from ~~and~~the ~~December~~absence ~~2011,~~of ~~$1.9~~a ~~million~~favorable ~~related~~settlement torecorded ~~uncertain~~in ~~tax~~the ~~positions,~~first quarter of 2012 and $0.95 million related to the ~~retirement~~issuance of ~~pollution~~private ~~control~~placement ~~bonds~~notes in ~~January and~~ May 2012. Partially offsetting these ~~decreases~~increases ~~was~~were $10.8 million related to the ~~issuance~~retirement of ~~private~~pollution ~~placement~~control ~~notes~~bonds in ~~December~~May ~~2011~~2012, $0.5 million related to other miscellaneous interest charges, and ~~May~~$0.3 ~~2012~~million related to reacquired debt.

Income Taxes

Federal and state income taxes decreased $110.93 million, or 371.69%, during the ~~third~~first quarter of ~~2012~~2013 compared to the ~~third~~first quarter of ~~2011~~2012. The decrease is primarily due to $30.8 million ~~for~~to record tax ~~returns~~expense ~~filed,~~at ~~$3.4 million for~~ the ~~change~~projected inannual ~~pre-tax~~effective ~~income excluding AFUDC equity~~rate, ~~$2.9~~partially ~~million~~offset ~~for~~by ~~a favorable settlement with taxing authorities,~~ $10.73 million for miscellaneous tax ~~credits,~~items and $1.0.2 million tofor ~~record~~higher pre-tax ~~expense~~income atexcluding ~~the~~AFUDC ~~projected annual effective rate~~equity. ~~These~~ ~~decreases were partially offset by $0.9 million for miscellaneous items.~~



Midstream
	FOR THE THREE MONTHS ENDED MAR. 31,
					FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2013		2012		VARIANCE			CHANGE
Operating revenue
Tolling operations	$	4,837	$	1,234	$	3,603		292.0	%
Other operations	1		1		—			—
Operating revenue	4,838		1,235		3,603			291.7	%
Operating expenses
Other operations	1,722		1,784		62			3.5	%
Maintenance	2,663		1,173		(1,490		)	(127.0	)%
Depreciation	1,500		1,532		32			2.1	%
Taxes other than income taxes

Filing Compare · CLECO POWER LLC