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 ~~March~~June 3130, ~~2013~~2016

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

Commission file number 1-15759

CLECO ~~CORPORATION~~CORPORATE HOLDINGS LLC

(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: (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 ¨
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 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 ¨
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 Corporate Holdings 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 ¨ Accelerated filer ¨ Non-accelerated filer x (Do not check if a smaller reporting company) Smaller reporting company ¨
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 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 ¨ Accelerated filer ¨ Non-accelerated filer x (Do not check if a smaller reporting company) Smaller reporting company ¨
Indicate by check mark whether the Registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act) Yes o No x
Indicate by check mark whether the Registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act) Yes ¨ No x

~~Number~~As of ~~shares~~August 11, 2016, Cleco Corporate Holdings LLC has no common stock outstanding. All of ~~each~~the outstanding interest of Cleco ~~Corporation’s~~Corporate ~~classes~~Holdings ofLLC ~~Common~~is ~~Stock~~held by Cleco Group LLC, asa ofwholly ~~the~~owned ~~latest~~subsidiary ~~practicable~~of ~~date~~Cleco Partners L.P.

Cleco Power LLC, a wholly owned subsidiary of Cleco Corporate Holdings LLC, 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.

Registrant	Description of Class	Shares Outstanding at April 25, 2013
Cleco Corporation	Common Stock, $1.00 Par Value	60,444,140



CLECO HOLDINGS
CLECO POWER		2016 2ND QUARTER FORM 10-Q

This Combined Quarterly Report on Form 10-Q is separately filed by Cleco Corporate Holdings LLC and Cleco Power LLC,. aInformation ~~wholly~~in ~~owned~~this ~~subsidiary~~filing ofrelating to Cleco ~~Corporation,~~Power ~~meets~~LLC ~~the~~is ~~conditions~~filed ~~set~~by ~~forth~~Cleco inCorporate ~~General~~Holdings ~~Instructions~~LLC ~~H(1)(a)~~ and separately by Cleco Power LLC on its own behalf. Cleco Power LLC makes no representation as to information relating to Cleco Corporate Holdings LLC (b)except ofas ~~Form~~it ~~10-Q~~may ~~and~~relate isto ~~therefore~~Cleco ~~filing~~Power ~~this~~LLC) ~~Form~~or ~~10-Q~~any ~~with~~other ~~the~~affiliate ~~reduced~~or ~~disclosure~~subsidiary ~~format~~of Cleco Corporate Holdings LLC.

CLECO CORPORATION CLECO POWER 2013 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
		PAGE
GLOSSARY OF TERMS		3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		5
PART I	Financial Information
ITEM 1.	Cleco ~~Corporation~~Holdings — Condensed Consolidated Financial Statements (Unaudited)	7
	Cleco Power — Condensed Consolidated Financial Statements	14
	Cleco Power — Condensed Consolidated Financial Statements (Unaudited)	17
	Notes to the Unaudited Condensed Consolidated Financial Statements	2026
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3748
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	4762
ITEM 4.	Controls and Procedures	4964
PART II	Other Information
ITEM 1.	Legal Proceedings	5065
ITEM 1A.	Risk Factors	5065
ITEM 4.	Mine Safety Disclosures	5065
ITEM 5.	Other Information	51
ITEM 6.	Exhibits	66
ITEM 6.	Exhibits	52
	Signatures	67
	Signatures	53

CLECO ~~CORPORATION~~HOLDINGS CLECO POWER ~~2013~~2016 ~~1ST~~2ND 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~~Corporate Holdings LLC (Cleco Holdings) 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, previously a wholly owned subsidiary of ~~APH~~Midstream. Acadia Power Partners, LLC was dissolved effective August 29, 2014.
Acadia Unit 1	Cleco Power’s 580-MW ~~unit~~, combined cycle, ~~natural gas-fired~~ power plant located at the Acadia Power Station ~~near~~in Eunice, Louisiana
Acadia Unit 2	Entergy Louisiana’s 580-MW ~~unit~~, combined cycle, ~~natural gas-fired~~ power plant located at the Acadia Power Station ~~near~~in Eunice, Louisiana, which is operated by Cleco Power
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
ALJ	Administrative Law Judge
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
AOCI	Accumulated Other Comprehensive Income (Loss)
Attala	Attala Transmission LLC, a wholly owned subsidiary of Cleco Corporation
ARO	Asset Retirement Obligation
Cajun	Cajun Gas Energy L.L.C., a wholly owned subsidiary of third parties
ARRA	American Recovery and Reinvestment Act of 2009
CERCLA	The Comprehensive Environmental Response, Compensation, and Liability Act of 1980
Attala	Attala Transmission LLC, a wholly owned subsidiary of Cleco Holdings
Cleco Innovations LLC	A wholly owned subsidiary of Cleco Corporation
CCR	Coal combustion by-products or residual
CERCLA	Comprehensive Environmental Response, Compensation, and Liability Act of 1980
CPP	Clean Power Plan
Cleco Group	Cleco Group LLC, a wholly owned subsidiary of Cleco Partners
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
Cleco Partners	Cleco Partners L.P., a Delaware limited partnership that is owned by a consortium of investors, including funds or investment vehicles managed by Macquarie Infrastructure and Real Assets, British Columbia Investment Management Corporation, John Hancock Financial, and other infrastructure investors.
CO2	Carbon dioxide
Coughlin	Cleco Power’s 775-MW, combined-cycle power plant located in St. Landry, Louisiana
CSAPR	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~~Holdings
Dodd-Frank Act	~~The~~ Dodd-Frank Wall Street Reform and Consumer Protection Act, ~~signed~~of ~~into law on July 21,~~ 2010
DOE	United States Department of Energy
Dolet Hills	A 650-MW generating unit at Cleco Power’s plant site in Mansfield, Louisiana. Cleco Power has a 50% ownership interest in the capacity of Dolet Hills.
EAC	Environmental Adjustment Clause
Entergy	Entergy Corporation
EGU	Electric Generating Unit
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.
EPA	U.S. Environmental Protection Agency
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
FAC	Fuel Adjustment Clause
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
FTR	Financial Transmission Right
FRP	Formula Rate Plan
GAAP	Generally Accepted Accounting Principles in the ~~United States~~U.S.
GO Zone	Gulf Opportunity Zone Act of 2005 (Public Law 109-135)
IRP	Integrated Resource Plan
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
kWh	Kilowatt-hour(s) ~~as applicable~~
LIBOR	London Inter-Bank Offer Rate
LDEQ	Louisiana Department of Environmental Quality
Lignite Mining Agreement	Dolet Hills Mine Lignite Mining Agreement, dated as of May 31, 2001
LED	Louisiana Economic Development
LIBOR	London Interbank Offered Rate
LPSC	Louisiana Public Service Commission
LTICP	Cleco Corporation Long-Term Incentive Compensation Plans
LTIP	Long-Term Incentive Compensation Plan
Madison Unit 3	A ~~600~~641-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~~HOLDINGS CLECO POWER ~~2013~~2016 ~~1ST~~2ND QUARTER FORM 10-Q

ABBREVIATION OR ACRONYM	DEFINITION
MATS	Mercury and Air Toxics Standards
Merger	Merger of Merger Sub with and into Cleco Corporation pursuant to the terms of the Merger Agreement which was completed on April 13, 2016
Merger Agreement	Agreement and Plan of Merger, dated as of October 17, 2014, by and among Cleco Partners, Merger Sub, and Cleco Corporation
Merger Commitments	Cleco Partners’, Cleco Holdings’, and Cleco Power’s 77 commitments to the LPSC as defined in Docket No. U-33434 of which a performance report must be filed annually by October 31 for the 12 months ending June 30
Merger Sub	Cleco MergerSub Inc., previously an indirect wholly owned subsidiary of Cleco Partners that was merged with and into Cleco Corporation, with Cleco Corporation surviving the Merger, and Cleco Corporation converting to a limited liability company and changing its name to Cleco Holdings
Midstream	Cleco Midstream Resources LLC, a wholly owned subsidiary of Cleco Holdings
MISO	Midcontinent Independent System Operator, Inc.
Moody’s	Moody’s Investors Service, a credit rating agency
MW	Megawatt(s)
MWh	Megawatt-hour(s)
NAAQS	National Ambient Air Quality Standards
NERC	North American Electric Reliability Corporation
NMTC	New Markets Tax Credit
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%
OATT	Open Access Transmission Tariff
NOx	Nitrogen oxides
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
Perryville	Perryville Energy Partners, L.L.C., a wholly owned subsidiary of Cleco Holdings
PCB	Polychlorinated biphenyl
PPA	Power purchase agreement
Perryville	Perryville Energy Partners, L.L.C., a wholly owned subsidiary of Cleco Corporation
PRP	Potentially Responsible Party
PLR	Private Letter Ruling
Registrant(s)	Cleco Holdings and/or Cleco Power
Power Purchase Agreement	Power Purchase Agreement, dated as of January 28, 2004, between Perryville and Entergy Services
Rodemacher Unit 2	A 523-MW generating unit at Cleco Power’s plant site in Boyce, Louisiana. Cleco Power has a 30% ownership interest in the capacity of Rodemacher Unit 2.
PRP	Potentially responsible party
ROE	Return on equity
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
S&P	Standard & Poor’s Ratings Services, a credit rating agency
SEC	U.S. Securities and Exchange Commission
SERP	~~Cleco Corporation~~ Supplemental Executive Retirement Plan
Support Group	Cleco Support Group LLC, a wholly owned subsidiary of Cleco Corporation
SO2	Sulfur dioxide
SWEPCO	Southwestern Electric Power Company, a wholly owned subsidiary of American Electric Power Company, Inc.
Support Group	Cleco Support Group LLC, a wholly owned subsidiary of Cleco Holdings
SWEPCO	Southwestern Electric Power Company, an electric utility subsidiary of American Electric Power Company, Inc.
VaR	Value-at-Risk
VIE	Variable Interest Entity

CLECO ~~CORPORATION~~HOLDINGS CLECO POWER ~~2013~~2016 ~~1ST~~2ND 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~~existing 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~~the ~~affecting~~effects ~~utility~~of ~~operations,~~the ~~such~~Merger ason ~~unusual~~Cleco ~~weather~~Holdings’ ~~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 Power’s ~~generation~~business ~~facilities~~relationships, ~~decreased~~operating ~~customer load~~results, ~~environmental incidents, environmental compliance costs,~~ and ~~power~~business ~~transmission system constraints~~generally,

• ~~Cleco~~regulatory ~~Corporation’s~~factors ~~holding~~such ~~company~~as ~~structure~~changes ~~and~~in ~~its~~rate-setting ~~dependence~~practices onor policies; the ~~earnings~~unpredictability in political actions of governmental regulatory bodies; adverse regulatory ratemaking actions; recovery of investments made under traditional regulation; recovery of storm restoration costs; the frequency, ~~dividends~~timing, and amount of rate increases or ~~distributions~~decreases; ~~from~~the ~~its~~impact ~~subsidiaries~~that torate ~~meet~~cases ~~its~~or ~~debt~~requests ~~obligations~~for ~~and~~FRP ~~pay~~extensions ~~dividends~~may have on ~~its~~operating ~~common~~decisions ~~stock~~of Cleco Power; the results of periodic NERC and LPSC audits; participation in MISO and the related operating challenges and uncertainties, including increased wholesale competition relative to more suppliers; and compliance with the ERO reliability standards for bulk power systems by Cleco Power,

• ~~Cleco~~the ~~Power’s~~ ability to ~~maintain~~recover ~~its~~fuel ~~right~~costs tothrough ~~sell~~the ~~wholesale generation at market-based rates within its control area~~FAC,

• ~~dependence~~factors ofaffecting ~~Cleco~~utility ~~Power~~operations, ~~for~~such ~~energy~~as ~~from~~unusual ~~sources~~weather conditions or other ~~than~~natural ~~its~~phenomena; ~~facilities~~catastrophic weather-related damage caused by hurricanes and ~~future~~other ~~sources~~storms or severe drought conditions; unscheduled generation outages; unanticipated maintenance or repairs; unanticipated changes to fuel costs or fuel supply costs, fuel shortages, transportation problems, or other developments; fuel mix of ~~such~~Cleco’s ~~additional~~generating ~~energy~~facilities; decreased customer load; environmental incidents and compliance costs; and power transmission system constraints,

• ~~nonperformance~~reliance byon ~~and~~third ~~creditworthiness~~parties for determination of ~~counterparties~~Cleco ~~under~~Power’s ~~power~~commitments ~~purchase~~and ~~agreements,~~obligations orto ~~the~~markets ~~restructuring~~for ofgeneration ~~those~~resources ~~agreements,~~and ~~including~~reliance ~~possible~~on ~~termination~~third-party transmission services,

• ~~nonperformance~~global by and ~~creditworthiness~~domestic ofeconomic conditions, including the ~~guarantor~~ability ~~counterparty~~of customers to continue paying utility bills, related growth and/or down-sizing of ~~the~~businesses ~~NMTC~~in ~~Fund~~Cleco’s service area, monetary fluctuations, changes in commodity prices, and inflation rates,

• ~~regulatory~~the ~~factors~~ability ~~such as changes in rate-setting policies, recovery~~ of ~~investments made under traditional regulation, recovery of storm restoration costs,~~ the ~~frequency~~lignite ~~and~~reserves ~~timing~~at ofDolet ~~rate~~Hills ~~increases~~to orprovide ~~decreases,~~sufficient ~~the~~fuel ~~results~~to ~~of periodic NERC and LPSC audits,~~ the ~~formation~~Dolet ofHills ~~ICTs,~~Power ~~including~~Station ~~participation~~until inat anleast ~~RTO and Cleco Power’s ability to recover~~2036,

~~related~~• ~~transmission~~Cleco ~~upgrade~~Power’s ~~costs,~~ability ~~and~~to ~~the~~maintain ~~compliance~~its ~~with~~right ~~the~~to ~~ERO~~sell ~~reliability~~wholesale ~~standards for bulk~~ power ~~systems~~at bymarket-based ~~Cleco~~rates ~~Power~~within ~~and~~its ~~Evangeline~~control area,

• ~~reliance on third parties for determination of~~ Cleco Power’s ~~commitments~~dependence ~~and~~on ~~obligations~~energy tofrom ~~markets~~sources ~~for~~other ~~generation~~than ~~resources~~its facilities and ~~reliance~~future onsources ~~third~~of ~~party~~such ~~transmission~~additional ~~services~~energy,

• ~~financial~~reliability orof ~~regulatory~~Cleco ~~accounting~~Power’s ~~principles~~generating ~~or policies imposed by FASB~~facilities, ~~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 increased conservation efforts of customers,

• ~~reliability~~the impact of ~~Cleco~~current ~~Power’s~~or future environmental laws and ~~Midstream’s~~regulations, including those related to CCRs, greenhouse gases, and energy efficiency that could limit or terminate the operation of certain generating ~~facilities~~units, increase costs, or reduce customer demand for electricity,

• ~~acts~~the ofability ~~terrorism,~~to ~~cyber~~recover ~~attacks,~~costs ~~data~~of ~~security~~compliance ~~breaches~~with orenvironmental ~~other~~laws ~~attempts~~and toregulations, ~~disrupt~~including ~~Cleco’s~~those ~~business~~through or the ~~business of third parties~~EAC, ~~or other man-made disasters,~~

• ~~availability~~financial or ~~cost~~regulatory ofaccounting ~~capital~~principles ~~resulting~~or ~~from~~policies ~~changes~~imposed inby ~~Cleco’s~~FASB, ~~business~~the orSEC, ~~financial condition~~FERC, ~~interest~~the ~~rates~~LPSC, or ~~market~~similar ~~perceptions~~entities ofwith ~~the~~regulatory ~~electric~~or ~~utility~~accounting ~~industry and energy-related industries~~oversight,

• ~~changes~~changing inmarket ~~tax~~conditions ~~laws~~and ora ~~disallowances~~variety of ~~uncertain~~other ~~tax~~factors ~~positions~~associated ~~that~~with ~~may~~physical ~~result~~energy, infinancial atransactions, ~~change~~and energy service activities, including, but not limited to, ~~tax~~price, ~~benefits~~basis, orcredit, ~~expenses~~liquidity, volatility, capacity, transmission, interest rates, and warranty risks,

• ~~employee~~legal, ~~work force factors~~environmental, ~~including~~and ~~work~~regulatory ~~stoppages~~delays and ~~changes~~other obstacles associated with acquisitions, reorganizations, investments in ~~key~~joint ~~executives~~ventures, or other capital projects,

• legal, environmental, and regulatory delays and other obstacles associated with mergers, acquisitions, reorganizations, investments in joint ventures, or other capital projects, including the AMI project,


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

• ~~changes~~the inavailability ~~federal,~~and ~~state,~~use orof ~~local~~alternative ~~laws~~sources of energy and ~~changes~~technologies, insuch ~~tax~~as ~~laws~~wind, orsolar, ~~rates~~battery storage, orand ~~regulating~~distributed ~~policies~~generation,

• ~~the~~changes ~~impact~~in offederal, ~~current~~state, or ~~future~~local ~~environmental~~laws (including tax laws), ~~and~~changes ~~regulations~~in tax rates, ~~including~~disallowances ~~those~~of ~~related~~tax positions, or changes in other regulating policies that may result in a change to ~~greenhouse~~tax ~~gases~~benefits or expenses,


•	the restriction on the ability of Cleco Power to make distributions to Cleco Holdings in certain instances, as a result of the Merger Commitments,


•	Cleco Holdings’ dependence on the earnings, dividends, or distributions from its subsidiaries to meet its debt obligations,

CLECO ~~CORPORATION~~HOLDINGS CLECO POWER ~~2013~~2016 ~~1ST~~2ND QUARTER FORM 10-Q

~~and~~• ~~energy~~acts ~~efficiency~~of ~~that~~terrorism, ~~could~~cyber ~~limit~~attacks, ordata ~~terminate~~security ~~the~~breaches ~~operation~~or ofother ~~certain~~attempts ~~generating~~to ~~units,~~disrupt ~~increase~~Cleco’s ~~costs,~~business or ~~reduce~~the ~~customer~~business ~~demand~~of ~~for~~third ~~electricity~~parties, or other man-made disasters,

• ~~the~~nonperformance ~~ability~~by ofand ~~Cleco~~creditworthiness ~~Power~~of tothe ~~recover~~guarantor ~~from~~counterparty ~~its~~of ~~customers~~ the ~~costs~~NMTC ~~of compliance with environmental laws and regulations~~Fund, ~~and~~

• ~~the~~credit ~~ability~~ratings of ~~Dolet~~Cleco ~~Hills~~Holdings ~~lignite~~and ~~reserve~~Cleco ~~to provide sufficient fuel to the Dolet Hills~~ Power ~~Station until at least 2026.~~,

~~For~~• ~~more~~ability ~~discussion of these factors and other factors that could cause actual results~~ to ~~differ~~remain ~~materially from those contemplated~~ in ~~the~~compliance ~~Registrants’~~with ~~forward-looking~~debt ~~statements~~covenants, please read “Risk Factors” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 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.


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


•	employee work force factors, including aging workforce and changes in management.

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 see “Risk Factors” in the Registrants’ Combined Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, and in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

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~~HOLDINGS CLECO POWER ~~2013~~2016 ~~1ST~~2ND QUARTER FORM 10-Q

PART I — FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Cleco ~~Corporation~~Holdings

These unaudited ~~condensed~~Condensed ~~consolidated~~Consolidated ~~financial~~Financial ~~statements~~Statements should be read in conjunction with Cleco ~~Corporation~~Holdings’s Consolidated Financial Statements and Notes included in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, ~~2012~~2015. 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~~HOLDINGS CLECO POWER ~~2013~~2016 ~~1ST~~2ND QUARTER FORM 10-Q

CLECO CORPORATION
CLECO HOLDINGS
Condensed Consolidated Statements of Income (Unaudited)
	FOR THE THREE MONTHS ENDED MAR. 31,
	SUCCESSOR			PREDECESSOR
(THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)	2013			2012
(THOUSANDS)	APR. 13, 2016 - JUNE 30, 2016			APR. 1, 2016 - APR. 12, 2016			FOR THE THREE MONTHS ENDED JUNE 30, 2015
Operating revenue
Electric operations	$	229,~~425~~927		$	~~209~~30,~~590~~997		$	276,661
Other operations	1114,~~543~~133			101,~~946~~949			15,803
Gross operating revenue	~~240~~244,~~968~~060			~~220~~32,~~536~~946			292,464
Electric customer credits	(21558		)	~~2,237~~(43		)	(3,390		)
Operating revenue, net	~~240~~243,~~947~~502			~~222~~32,~~773~~903			289,074
Operating expenses
Fuel used for electric generation	8566,~~365~~251			738,~~064~~934			84,011
Power purchased for utility customers	424,~~856~~382			84,~~637~~144			34,132
Other operations	2624,~~924~~270			274,~~700~~244			31,436
Maintenance	1722,~~635~~905			175,~~235~~182			21,436
Depreciation	34,032			31,846
Depreciation and amortization	34,160			5,137			36,468
Taxes other than income taxes	1210,~~634~~379			101,~~030~~704			12,117
Loss (gain) on sale of assets	1,034			(33		)
Merger transaction and commitment costs	171,303			33,390			(410		)
Total operating expenses	~~182~~353,~~480~~650			~~168~~62,~~479~~735			219,190
Operating income	58,467			54,294
Operating (loss) income	(110,148		)	(29,832		)	69,884
Interest income	~~201~~197			3441			90
Allowance for other funds used during construction	1,164			1,017
Allowance for equity funds used during construction	749			72			460
Equity income from investees, before tax	—			1
Other income	1,738			364			764
Other income	2,273			9,375
Other expense	(187		)	(73		)	(695		)
Other expense	(435		)	(656		)
Interest charges
Interest charges
Interest charges, including amortization of debt issuance costs, premiums, and discounts, net	26,693			2,592			20,040
Interest charges, including amortization of debt expense, premium, and discount, net	21,831			20,968
Allowance for borrowed funds used during construction	(228		)	(23		)	(130		)
Allowance for borrowed funds used during construction	(375		)	(344		)
Total interest charges	26,465			2,569			19,910
Total interest charges	21,456			20,624
(Loss) income before income taxes	(134,116		)	(31,997		)	50,593
Income before income taxes	40,214			43,441
Federal and state income tax (benefit) expense	(52,202		)	(8,669		)	20,359
Federal and state income tax expense	13,081			13,410
Net (loss) income	$	(81,914	)	$	(23,328	)	$	30,234
Net income applicable to common stock	$	27,133		$	30,031
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
Average number of basic common shares outstanding	60,399,697			60,372,567
Average number of diluted common shares outstanding	60,667,401			60,598,975
Basic earnings per share
Net income applicable to common stock	$	0.45		$	0.50
Diluted earnings per share
Net income applicable to common stock	$	0.45		$	0.50
Cash dividends paid per share of common stock	$	0.3375		$	0.3125
The accompanying notes are an integral part of the condensed consolidated financial statements.

CLECO ~~CORPORATION~~HOLDINGS CLECO POWER ~~2013~~2016 ~~1ST~~2ND QUARTER FORM 10-Q

CLECO CORPORATION
CLECO HOLDINGS
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE THREE MONTHS ENDED MAR. 31,
	SUCCESSOR			PREDECESSOR
(THOUSANDS)	~~2013~~APR. 13, 2016 - JUNE 30, 2016			~~2012~~APR. 1, 2016 - APR. 12, 2016			FOR THE THREE MONTHS ENDED JUNE 30, 2015
Net income	$	27,133		$	30,031
Net (loss) income	$	(81,914	)	$	(23,328	)	$	30,234
Other comprehensive income, net of tax:
Other comprehensive income, net of tax
Net gain on prior service cost (net of tax expense of $336 in 2013 and $165 in 2012)	536			363
Postretirement benefits gain (net of tax expense of $0, $37, and $411, respectively)	—			59			656
Net gain on cash flow hedges (net of tax expense of $836 in 2013 and $2,774 in 2012)	1,337			4,435
Net gain on cash flow hedges (net of tax expense of $0, $4, and $33, respectively)	—			7			53
Total other comprehensive income, net of tax	~~1,873~~—			~~4,798~~66			709
Comprehensive income, net of tax	$	29,006		$	34,829
Comprehensive (loss) income, net of tax	$	(81,914	)	$	(23,262	)	$	30,943
The accompanying notes are an integral part of the condensed consolidated financial statements.
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

CLECO ~~CORPORATION~~HOLDINGS CLECO POWER ~~2013~~2016 ~~1ST~~2ND QUARTER FORM 10-Q

CLECO CORPORATION
CLECO HOLDINGS
Condensed Consolidated Balance Sheets (Unaudited)
Condensed Consolidated Statements of Income (Unaudited)
(THOUSANDS)	AT MAR. 31, 2013			AT DEC. 31, 2012
	SUCCESSOR			PREDECESSOR
Assets
(THOUSANDS)	APR. 13, 2016 - JUNE 30, 2016			JAN. 1, 2016 -APR. 12, 2016			FOR THE SIX MONTHS ENDED JUNE 30, 2015
Current assets
Operating revenue
Cash and cash equivalents	$	46,467		$	31,020
Electric operations	$	229,927		$	281,154		$	554,175
Restricted cash and cash equivalents	3,278			8,781
Other operations	14,133			19,080			33,535
Customer accounts receivable (less allowance for doubtful accounts of $826 in 2013 and $1,105 in 2012)	39,636			39,293
Gross operating revenue	244,060			300,234			587,710
Other accounts receivable	24,219			37,741
Electric customer credits	(558		)	(364		)	(3,179		)
Taxes receivable, net	—			34,612
Operating revenue, net	243,502			299,870			584,531
Unbilled revenue	23,817			28,662
Operating expenses
Fuel inventory, at average cost	34,812			46,867
Fuel used for electric generation	66,251			96,378			172,136
Material and supplies inventory, at average cost	59,668			58,232
Power purchased for utility customers	24,382			27,249			78,213
Accumulated deferred federal and state income taxes, net	43,784			79,353
Other operations	24,270			33,563			59,995
Accumulated deferred fuel	3,981			7,833
Maintenance	22,905			29,813			40,518
Cash surrender value of company-/trust-owned life insurance policies	59,437			57,346
Depreciation and amortization	34,160			44,076			73,746
Prepayments	4,240			5,951
Taxes other than income taxes	10,379			14,611			25,589
Regulatory assets - other	9,379			11,095
Merger transaction and commitment costs	171,303			34,912			1,730
Other current assets	3,618			552
Gain on sale of asset	—			(1,095		)	—
Total current assets	356,336			447,338
Total operating expenses	353,650			279,507			451,927
Property, plant, and equipment
Operating (loss) income	(110,148		)	20,363			132,604
Property, plant, and equipment	4,185,832			4,140,194
Interest income	197			265			388
Accumulated depreciation	(1,332,760		)	(1,311,273		)
Allowance for equity funds used during construction	749			723			1,537
Net property, plant, and equipment	2,853,072			2,828,921
Other income	1,738			870			1,409
Construction work in progress	172,093			180,540
Other expense	(187		)	(590		)	(1,063		)
Total property, plant, and equipment, net	3,025,165			3,009,461
Interest charges
Equity investment in investees	14,541			14,540
Interest charges, including amortization of debt issuance costs, premiums, and discounts, net	26,693			22,330			40,483
Prepayments	4,344			4,261
Allowance for borrowed funds used during construction	(228		)	(207		)	(451		)
Restricted cash and cash equivalents	5,788			5,440
Total interest charges	26,465			22,123			40,032
Restricted investments	10,853			10,852
(Loss) income before income taxes	(134,116		)	(492		)	94,843
Regulatory assets - deferred taxes, net	211,617			210,445
Federal and state income tax (benefit) expense	(52,202		)	3,468			37,687
Regulatory assets - other	286,978			289,570
Net (loss) income	$	(81,914	)	$	(3,960	)	$	57,156
Net investment in direct financing lease	13,538			13,542
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
Intangible asset	117,401			120,545
Other deferred charges	20,571			21,355
Total assets	$	4,067,132		$	4,147,349
The accompanying notes are an integral part of the condensed consolidated financial statements.

(Continued on next page)

CLECO ~~CORPORATION~~HOLDINGS CLECO POWER ~~2013~~2016 ~~1ST~~2ND QUARTER FORM 10-Q

CLECO CORPORATION
CLECO HOLDINGS
Condensed Consolidated Balance Sheets (Unaudited) (Continued)
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
(THOUSANDS)	AT MAR. 31, 2013			AT DEC. 31, 2012
	SUCCESSOR			PREDECESSOR
Liabilities and shareholders’ equity
(THOUSANDS)	APR. 13, 2016 - JUNE 30, 2016			JAN. 1, 2016 - APR. 12, 2016			FOR THE SIX MONTHS ENDED JUNE 30, 2015
Liabilities
Net (loss) income	$	(81,914	)	$	(3,960	)	$	57,156
Current liabilities
Other comprehensive income, net of tax
Long-term debt due within one year	$	16,625		$	91,140
Postretirement benefits gain (net of tax expense of $0, $367, and $792, respectively)	—			587			1,265
Accounts payable	66,131			102,695
Net gain on cash flow hedges (net of tax expense of $0, $37, and $66, respectively)	—			60			106
Customer deposits	46,576			45,553
Total other comprehensive income, net of tax	—			647			1,371
Provision for rate refund	4,186			4,165
Comprehensive (loss) income, net of tax	$	(81,914	)	$	(3,313	)	$	58,527
Taxes payable	21,415			—
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
Interest accrued	26,233			12,957
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~~HOLDINGS CLECO POWER ~~2013~~2016 ~~1ST~~2ND QUARTER FORM 10-Q

CLECO CORPORATION
CLECO HOLDINGS
Condensed Consolidated Statements of Cash Flows (Unaudited)
Condensed Consolidated Balance Sheets (Unaudited)
	FOR THE THREE MONTHS ENDED MAR. 31,
	SUCCESSOR			PREDECESSOR
(THOUSANDS)	~~2013~~AT JUNE 30, 2016			~~2012~~AT DEC. 31, 2015
Operating activities
Assets
Net income	$	27,133		$	30,031
Current assets
Adjustments to reconcile net income to net cash provided by operating activities:
Cash and cash equivalents	$	16,912		$	68,246
Depreciation and amortization	38,586			38,445
Restricted cash and cash equivalents	144,150			9,263
Unearned compensation expense	1,510			1,329
Customer accounts receivable (less allowance for doubtful accounts of $3,957 in 2016 and $2,674 in 2015)	46,503			43,255
Allowance for other funds used during construction	(1,164		)	(1,017		)
Accounts receivable - affiliate	3,786			—
Net deferred income taxes	10,030			889
Other accounts receivable	25,681			27,677
Deferred fuel costs	4,493			7,433
Unbilled revenue	46,419			33,995
Cash surrender value of company-/trust-owned life insurance	(2,071		)	(1,806		)
Fuel inventory, at average cost	38,023			72,838
Changes in assets and liabilities:
Material and supplies, at average cost	79,469			76,731
Accounts receivable	12,059			7,812
Energy risk management assets	13,989			7,673
Unbilled revenue	4,845			4,302
Accumulated deferred fuel	19,543			12,910
Fuel, materials and supplies inventory	10,619			(4,187		)
Cash surrender value of company-/trust-owned life insurance policies	76,424			73,823
Prepayments	17,~~628~~798			17,~~820~~883
Accounts payable	(37,345		)	(56,725		)
Regulatory assets	40,929			14,117
Customer deposits	3,074			2,952
Other current assets	841			448
Postretirement benefit obligations	(32,422		)	2,831
Total current assets	560,467			448,859
Regulatory assets and liabilities, net	(4,836		)	(4,436		)
Property, plant, and equipment
Other deferred accounts	2,121			(1,883		)
Property, plant, and equipment	3,376,333			4,661,212
Taxes accrued	55,930			12,112
Accumulated depreciation	(20,990		)	(1,536,158		)
Interest accrued	13,276			4,511
Net property, plant, and equipment	3,355,343			3,125,054
Other operating	(4,019		)	1,306
Construction work in progress	97,194			66,509
Net cash provided by operating activities	103,447			45,719
Total property, plant, and equipment, net	3,452,537			3,191,563
Investing activities
Equity investment in investee	19,272			16,822
Additions to property, plant, and equipment	(44,887		)	(43,487		)
Goodwill	1,490,402			—
Allowance for other funds used during construction	1,164			1,017
Prepayments	4,656			4,542
Property, plant, and equipment grants	729			1,212
Restricted cash and cash equivalents	24,291			16,195
Return of equity investment in tax credit fund	9			10,215
Regulatory assets - deferred taxes, net	230,523			236,941
Contributions to tax credit fund	(12,081		)	(18,540		)
Regulatory assets	471,389			284,689
Transfer of cash from restricted accounts	5,154			5,248
Net investment in direct financing lease	13,442			13,464
Purchase of restricted investments	(1,447		)	—
Intangible asset	157,731			74,963
Maturity of restricted investments	1,409			—
Tax credit fund investment, net	12,072			13,741
Other investing	240			(597		)
Other deferred charges	17,072			22,299
Net cash used in investing activities	(49,710		)	(44,932		)
Total assets	$	6,453,854		$	4,324,078
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
(Continued on next page)

(Continued on next page)

CLECO ~~CORPORATION~~HOLDINGS CLECO POWER ~~2013~~2016 ~~1ST~~2ND QUARTER FORM 10-Q

CLECO CORPORATION
CLECO HOLDINGS
Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued)
Condensed Consolidated Balance Sheets (Unaudited)
	FOR THE THREE MONTHS ENDED MAR. 31,
	SUCCESSOR			PREDECESSOR
(THOUSANDS)	~~2013~~AT JUNE 30, 2016			~~2012~~AT DEC. 31, 2015
Financing activities
Liabilities and member’s equity/shareholders’ equity
Draws on credit facility	108,000			—
Liabilities
Payments on credit facility	(118,000		)	(10,000		)
Current liabilities
Issuance of long-term debt	60,000			—
Long-term debt due within one year	$	20,007		$	19,421
Retirement of long-term debt	(7,129		)	(17,847		)
Accounts payable	100,802			93,822
Repurchase of long-term debt	(60,000		)	—
Accounts payable, affiliate	146			—
Dividends paid on common stock	(20,593		)	(19,144		)
Customer deposits	56,328			55,233
Other financing	(568		)	(123		)
Provision for rate refund	3,618			2,696
Net cash used in financing activities	(38,290		)	(47,114		)
Provision for merger commitments	142,003			—
Net increase (decrease) in cash and cash equivalents	15,447			(46,327		)
Taxes payable	16,246			2,573
Cash and cash equivalents at beginning of period	31,020			93,576
Interest accrued	14,041			7,814
Cash and cash equivalents at end of period	$	46,467		$	47,249
Energy risk management liabilities	371			275
Supplementary cash flow information
Regulatory liabilities - other	—			312
Interest paid (net of amount capitalized)	$	6,326		$	8,251
Deferred compensation	10,933			10,156
Income taxes (refunded) paid, net	$	(45,343	)	$	6
Other current liabilities	17,776			14,277
Supplementary non-cash investing and financing activities
Total current liabilities	382,271			206,579
Accrued additions to property, plant, and equipment	$	9,191		$	6,974
Long-term liabilities and deferred credits
Non-cash additions to property, plant, and equipment, net	$	1,134		$	3,333
Accumulated deferred federal and state income taxes, net	1,002,784			925,103
Issuance of common stock – ESPP	$	78		$	86
Accumulated deferred investment tax credits	2,998			3,245
The accompanying notes are an integral part of the condensed consolidated financial statements.
Postretirement benefit obligations	213,638			205,036
Restricted storm reserve	16,775			16,177
Other deferred credits	27,935			24,670
Total long-term liabilities and deferred credits	1,264,130			1,174,231
Long-term debt, net	2,759,226			1,268,427
Total liabilities	4,405,627			2,649,237
Commitments and Contingencies (Note 12)
Member’s equity/Shareholders’ equity
Member’s equity/Common shareholders’ equity
Membership interest/Common stock (1)	2,130,141			456,412
(Accumulated deficit)/Retained earnings	(81,914		)	1,245,014
Accumulated other comprehensive loss	—			(26,585		)
Total member’s equity/common shareholders’ equity	2,048,227			1,674,841
Total liabilities and member’s equity/shareholders’ equity	$	6,453,854		$	4,324,078
(1)At December 31, 2015, shareholders’ equity included $418.5 million of premium on common stock, $61.1 million of common stock, and $23.2 million of treasury stock. At December 31, 2015, Cleco Holdings had 100,000,000 shares of common stock authorized, 61,058,918 shares of common stock issued, and 60,482,468 shares of common stock outstanding, par value $1 per share. At December 31, 2015, Cleco Holdings had 576,450 shares of treasury stock.
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

CLECO ~~CORPORATION~~HOLDINGS CLECO POWER ~~2013~~2016 ~~1ST~~2ND QUARTER FORM 10-Q

PART I — FINANCIAL INFORMATION



CLECO HOLDINGS

Condensed Consolidated Statements of Cash Flows (Unaudited)
	SUCCESSOR			PREDECESSOR
(THOUSANDS)	APR. 13, 2016 - JUNE 30, 2016			JAN. 1, 2016 - APR. 12, 2016			FOR THE SIX MONTHS ENDED JUNE 30, 2015
Operating activities
Net (loss) income	$	(81,914	)	$	(3,960	)	$	57,156
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	57,718			45,869			76,951
Gain on sale of asset	—			(1,095		)	—
Unearned compensation expense	361			3,276			3,341
Allowance for equity funds used during construction	(748		)	(724		)	(1,537		)
Net deferred income taxes	(47,264		)	2,219			33,367
Deferred fuel costs	(7,717		)	977			7,251
Cash surrender value of company-/trust-owned life insurance	(1,761		)	(840		)	(366		)
Provision for merger commitments	150,840			—			—
Changes in assets and liabilities
Accounts receivable	(5,360		)	(1,865		)	(8,062		)
Accounts and notes receivable, affiliate	(3,786		)	—			—
Unbilled revenue	(12,988		)	563			(4,866		)
Fuel inventory and materials and supplies	12,765			19,312			4,973
Prepayments	(2,425		)	2,395			1,295
Accounts payable	(19,143		)	8,348			(27,652		)
Accounts and notes payable, affiliate	146			—			—
Customer deposits	2,787			3,342			6,104
Postretirement benefit obligations	936			9,746			6,878
Regulatory assets and liabilities, net	4,104			5,178			8,764
Other deferred accounts	(7,109		)	6,878			(7,872		)
Taxes accrued	(8,161		)	10,820			16,959
Interest accrued	(11,760		)	17,909			1,112
Deferred compensation	(1,436		)	(793		)	(908		)
Other operating	2,705			2,224			1,579
Net cash provided by operating activities	20,790			129,779			174,467
Investing activities
Additions to property, plant, and equipment	(43,623		)	(42,392		)	(78,180		)
Allowance for equity funds used during construction	748			724			1,537
Proceeds from sale of property	159			1,932			—
Premiums paid on trust-owned life insurance	—			—			(1,375		)
Contributions to equity investment in investee	—			(2,450		)	(840		)
Return of equity investment in tax credit fund	475			476			1,172
Contributions to tax credit fund	—			—			(923		)
Transfer of cash (to) from restricted accounts, net	(147,830		)	4,847			(41		)
Other investing	104			53			459
Net cash used in investing activities	(189,967		)	(36,810		)	(78,191		)

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, 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~~HOLDINGS CLECO POWER ~~2013~~2016 ~~1ST~~2ND QUARTER FORM 10-Q

CLECO POWER
CLECO HOLDINGS
Condensed Consolidated Statements of Income (Unaudited)
Condensed Consolidated Statements of Cash Flows (Unaudited)
	FOR THE THREE MONTHS ENDED MAR. 31,
	SUCCESSOR			PREDECESSOR
(THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)	2013			2012
(THOUSANDS)	APR. 13, 2016 - JUNE 30, 2016			JAN. 1, 2016 - APR. 12, 2016			FOR THE SIX MONTHS ENDED JUNE 30, 2015
Operating revenue
Financing activities
Electric operations	$	229,425		$	209,590
Draws on credit facilities	15,000			3,000			62,000
Other operations	11,038			10,448
Payments on credit facilities	(15,000		)	(10,000		)	(87,000		)
Affiliate revenue	336			345
Issuance of long-term debt	1,350,000			—			—
Gross operating revenue	240,799			220,383
Repayment of long-term debt	(1,350,000		)	(8,546		)	(43,053		)
Electric customer credits	(21		)	2,237
Payment of financing costs	(5,830		)	(43		)	(154		)
Operating revenue, net	240,778			222,620
Dividends paid	(572		)	(24,579		)	(48,869		)
Operating expenses
Contribution from member	100,720			—			—
Fuel used for electric generation	85,365			73,064
Distribution to member	(28,000		)	—			—
Power purchased for utility customers	9,693			9,871
Other financing	(559		)	(717		)	(1,194		)
Other operations	25,373			26,343
Net cash provided by (used in) financing activities	65,759			(40,885		)	(118,270		)
Maintenance	14,794			16,014
Net (decrease) increase in cash and cash equivalents	(103,418		)	52,084			(21,994		)
Depreciation	32,330			30,090
Cash and cash equivalents at beginning of period	120,330			68,246			44,423
Taxes other than income taxes	11,458			8,932
Cash and cash equivalents at end of period	$	16,912		$	120,330		$	22,429
Total operating expenses	179,013			164,314
Supplementary cash flow information
Operating income	61,765			58,306
Interest paid, net of amount capitalized	$	37,466		$	2,478		$	36,751
Interest income	198			30
Income taxes paid (refunded), net	$	256		$	(481	)	$	306
Allowance for other funds used during construction	1,164			1,017
Supplementary non-cash investing and financing activities
Other income	697			1,096
Accrued additions to property, plant, and equipment	$	19,668		$	10,619		$	7,674
Other expense	(444		)	(651		)
Additions to property, plant, and equipment - ARO	$	—		$	961		$	—
Interest charges
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
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~~HOLDINGS CLECO POWER ~~2013~~2016 ~~1ST~~2ND QUARTER FORM 10-Q

CLECO POWER
CLECO HOLDINGS
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
Condensed Consolidated Statements of Changes in Equity (Unaudited)
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	COMMON STOCK/MEMBERSHIP INTEREST(1)			RETAINEDEARNINGS/(ACCUMULATED DEFICIT)			AOCI			TOTALSHAREHOLDERS’/MEMBER’SEQUITY
(THOUSANDS)	2013			2012
PREDECESSOR
Net income	$	27,793		$	26,805
Balances, Dec. 31, 2015	$	456,412		$	1,245,014		$	(26,585	)	$	1,674,841
Other comprehensive income, net of tax:
Common stock issued for compensatory plans	(1,277		)	—			—			(1,277		)
Net gain on prior service cost (net of tax expense of $157 in 2013 and $75 in 2012)	251			204
Dividends on common stock, $0.40 per share	—			(24,190		)	—			(24,190		)
Net gain on cash flow hedges (net of tax expense of $836 in 2013 and $2,774 in 2012)	1,337			4,435
Net loss	—			(3,960		)	—			(3,960		)
Total other comprehensive income, net of tax	1,588			4,639
Other comprehensive income, net of tax	—			—			647			647
Comprehensive income, net of tax	$	29,381		$	31,444
Balances, Apr. 12, 2016	$	455,135		$	1,216,864		$	(25,938	)	$	1,646,061
The accompanying notes are an integral part of the condensed consolidated financial statements.
SUCCESSOR
Balances, Apr. 13, 2016 (2)	$	2,158,141		$	—		$	—		$	2,158,141
Distribution to member	(28,000		)	—			—			(28,000		)
Net loss	—			(81,914		)	—			(81,914		)
Balances, June 30, 2016	$	2,130,141		$	(81,914	)	$	—		$	2,048,227
(1)At April 12, 2016, and December 31, 2015, shareholders’ equity of the predecessor company included $61.1 million of common stock. At April 12, 2016, and December 31, 2015, shareholders’ equity of the predecessor company included $414.6 million and $418.5 million of premium on common stock, and $20.5 million and $23.2 million of treasury stock, respectively. (2)The April 13, 2016, beginning balance of the successor company differs from the April 12, 2016, ending balances of the predecessor company due to acquisition accounting adjustments related to the Merger.
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

CLECO ~~CORPORATION~~HOLDINGS CLECO POWER ~~2013~~2016 ~~1ST~~2ND QUARTER FORM 10-Q

CLECO POWER
Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT MAR. 31, 2013			AT DEC. 31, 2012
Assets
Utility plant and equipment
Property, plant, and equipment	$	3,917,225		$	3,871,940
Accumulated depreciation	(1,246,863		)	(1,227,078		)
Net property, plant, and equipment	2,670,362			2,644,862
Construction work in progress	166,100			176,584
Total utility plant, net	2,836,462			2,821,446
Current assets
Cash and cash equivalents	42,439			23,368
Restricted cash and cash equivalents	3,278			8,781
Customer accounts receivable (less allowance for doubtful accounts of $826 in 2013 and $1,105 in 2012)	39,636			39,293
Accounts receivable - affiliate	1,125			2,991
Other accounts receivable	23,881			37,562
Unbilled revenue	23,817			28,662
Fuel inventory, at average cost	34,812			46,867
Material and supplies inventory, at average cost	56,872			55,472
Accumulated deferred federal and state income taxes, net	53,897			87,286
Accumulated deferred fuel	3,981			7,833
Cash surrender value of company-owned life insurance policies	20,944			20,842
Prepayments	3,270			4,415
Regulatory assets - other	9,379			11,095
Other current assets	2,685			371
Total current assets	320,016			374,838
Equity investment in investee	14,532			14,532
Prepayments	4,344			4,261
Restricted cash and cash equivalents	5,691			5,343
Restricted investments	10,853			10,852
Regulatory assets - deferred taxes, net	211,617			210,445
Regulatory assets - other	286,978			289,570
Intangible asset	117,401			120,545
Other deferred charges	19,209			19,897
Total assets	$	3,827,103		$	3,871,729

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~(Continued~~Cleco ~~on next page)~~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, 2015. 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~~HOLDINGS CLECO POWER ~~2013~~2016 ~~1ST~~2ND QUARTER FORM 10-Q

CLECO POWER
Condensed Consolidated Balance Sheets (Unaudited) (Continued)
Condensed Consolidated Statements of Income (Unaudited)
(THOUSANDS)	AT MAR. 31, 2013			AT DEC. 31, 2012
	FOR THE THREE MONTHS ENDED JUNE 30,
Liabilities and member’s equity
(THOUSANDS)	2016			2015
Member’s equity	$	1,349,300		$	1,319,919
Operating revenue
Long-term debt, net	1,299,229			1,232,258
Electric operations	$	263,155		$	276,661
Total capitalization	2,648,529			2,552,177
Other operations	15,564			15,283
Current liabilities
Affiliate revenue	225			331
Long-term debt due within one year	16,625			91,140
Gross operating revenue	278,944			292,275
Accounts payable	57,570			89,782
Electric customer credits	(601		)	(3,390		)
Accounts payable - affiliate	6,831			10,097
Operating revenue, net	278,343			288,885
Customer deposits	46,576			45,553
Operating expenses
Provision for rate refund	4,186			4,165
Fuel used for electric generation	75,185			84,011
Taxes payable	10,029			1,328
Power purchased for utility customers	28,526			34,132
Interest accrued	27,350			13,893
Other operations	29,287			31,650
Interest rate risk management liability	424			2,627
Maintenance	27,954			21,230
Regulatory liabilities - other	3,296			8,255
Depreciation and amortization	36,240			36,126
Other current liabilities	12,220			11,746
Taxes other than income taxes	11,491			11,493
Total current liabilities	185,107			278,586
Merger commitment costs	151,501			—
Commitments and Contingencies (Note 11)
Total operating expenses	360,184			218,642
Deferred credits
Operating (loss) income	(81,841		)	70,243
Accumulated deferred federal and state income taxes, net	829,744			845,769
Interest income	146			48
Accumulated deferred investment tax credits	5,975			6,252
Allowance for equity funds used during construction	821			460
Postretirement benefit obligations	104,699			137,637
Other income	204			846
Restricted storm reserve	16,631			16,285
Other expense	(272		)	(474		)
Uncertain tax positions	222			222
Interest charges
Other deferred credits	36,196			34,801
Interest charges, including amortization of debt issuance costs, premiums, and discounts, net	19,564			19,531
Total deferred credits	993,467			1,040,966
Allowance for borrowed funds used during construction	(251		)	(130		)
Total liabilities and member’s equity	$	3,827,103		$	3,871,729
Total interest charges	19,313			19,401
The accompanying notes are an integral part of the condensed consolidated financial statements.
(Loss) income before income taxes	(100,255		)	51,722
Federal and state income tax (benefit) expense	(39,026		)	19,909
Net (loss) income	$	(61,229	)	$	31,813
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

CLECO ~~CORPORATION~~HOLDINGS CLECO POWER ~~2013~~2016 ~~1ST~~2ND QUARTER FORM 10-Q

CLECO POWER
Condensed Consolidated Statements of Cash Flows (Unaudited)
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE THREE MONTHS ENDED MAR. 31,
	FOR THE THREE MONTHS ENDED JUNE 30,
(THOUSANDS)	~~2013~~2016			~~2012~~2015
Operating activities
Net (loss) income	$	(61,229	)	$	31,813
Net income	$	27,793		$	26,805
Other comprehensive income, net of tax
Adjustments to reconcile net income to net cash provided by operating activities:
Postretirement benefits gain (net of tax expense of $113 in 2016 and $180 in 2015)	181			288
Depreciation and amortization	35,094			33,049
Net gain on cash flow hedges (net of tax expense of $33 in 2016 and 2015)	53			53
Unearned compensation expense	331			297
Total other comprehensive income, net of tax	234			341
Allowance for other funds used during construction	(1,164		)	(1,017		)
Comprehensive (loss) income, net of tax	$	(60,995	)	$	32,154
Net deferred income taxes	14,560			14,052
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
Deferred fuel costs	4,493			7,433
Cash surrender value of company-owned life insurance	(102		)	(107		)
Changes in assets and liabilities:
Accounts receivable	12,098			7,326
Accounts and notes receivable, affiliate	2,033			286
Unbilled revenue	4,845			4,302
Fuel, materials and supplies inventory	10,655			(4,105		)
Prepayments	1,062			1,085
Accounts payable	(31,744		)	(47,174		)
Accounts and notes payable, affiliate	(3,621		)	11,102
Customer deposits	3,074			2,952
Postretirement benefit obligations	(32,903		)	1,673
Regulatory assets and liabilities, net	(4,836		)	(4,436		)
Other deferred accounts	1,650			(4,795		)
Taxes accrued	8,688			(2,171		)
Interest accrued	13,457			5,330
Other operating	(2,365		)	(220		)
Net cash provided by operating activities	63,098			51,667
Investing activities
Additions to property, plant, and equipment	(43,599		)	(42,661		)
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~~HOLDINGS CLECO POWER ~~2013~~2016 ~~1ST~~2ND QUARTER FORM 10-Q

Index to Applicable Notes to the Unaudited Condensed Consolidated Financial Statements of Registrants
CLECO POWER
Note 1	Summary of Significant Accounting Policies	Cleco Corporation and Cleco Power
Condensed Consolidated Statements of Income (Unaudited)
Note 2	Recent Authoritative Guidance	Cleco Corporation and Cleco Power
	FOR THE SIX MONTHS ENDED JUNE 30,
Note 3	Regulatory Assets and Liabilities	Cleco Corporation and Cleco Power
(THOUSANDS)	2016			2015
Note 4	Fair Value Accounting	Cleco Corporation and Cleco Power
Operating revenue
Note 5	Debt	Cleco Corporation and Cleco Power
Electric operations	$	513,312		$	554,175
Note 6	Pension Plan and Employee Benefits	Cleco Corporation and Cleco Power
Other operations	32,178			32,495
Note 7	Income Taxes	Cleco Corporation and Cleco Power
Affiliate revenue	457			665
Note 8	Disclosures about Segments	Cleco Corporation
Gross operating revenue	545,947			587,335
Note 9	Electric Customer Credits	Cleco Corporation and Cleco Power
Electric customer credits	(922		)	(3,179		)
Note 10	Variable Interest Entities	Cleco Corporation and Cleco Power
Operating revenue, net	545,025			584,156
Note 11	Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees	Cleco Corporation and Cleco Power
Operating expenses
Note 12	Affiliate Transactions	Cleco Corporation and Cleco Power
Fuel used for electric generation	162,629			172,136
Note 13	Storm Restoration	Cleco Corporation and Cleco Power
Power purchased for utility customers	51,631			78,213
Note 14	Accumulated Other Comprehensive Loss	Cleco Corporation and Cleco Power
Other operations	58,681			60,130
Maintenance	52,492			40,175
Depreciation and amortization	74,843			73,109
Taxes other than income taxes	23,916			24,479
Merger commitment costs	151,501			—
Gain on sale of asset	(1,095		)	—
Total operating expenses	574,598			448,242
Operating (loss) income	(29,573		)	135,914
Interest income	325			304
Allowance for equity funds used during construction	1,472			1,537
Other income	351			1,297
Other expense	(789		)	(1,062		)
Interest charges
Interest charges, including amortization of debt issuance costs, premiums, and discounts, net	39,034			39,755
Allowance for borrowed funds used during construction	(435		)	(451		)
Total interest charges	38,599			39,304
(Loss) income before income taxes	(66,813		)	98,686
Federal and state income tax (benefit) expense	(26,463		)	38,268
Net (loss) income	$	(40,350	)	$	60,418
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.



CLECO HOLDINGS
CLECO POWER		2016 2ND QUARTER FORM 10-Q



CLECO POWER

Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2016			2015
Net (loss) income	$	(40,350	)	$	60,418
Other comprehensive income, net of tax
Postretirement benefits gain (net of tax expense of $239 in 2016 and $126 in 2015)	381			201
Net gain on cash flow hedges (net of tax expense of $66 in 2016 and 2015)	106			106
Total other comprehensive income, net of tax	487			307
Comprehensive (loss) income, net of tax	$	(39,863	)	$	60,725
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.



CLECO HOLDINGS
CLECO POWER		2016 2ND QUARTER FORM 10-Q



CLECO POWER

Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT JUNE 30, 2016			AT DEC. 31, 2015
Assets
Utility plant and equipment
Property, plant, and equipment	$	4,694,517		$	4,645,698
Accumulated depreciation	(1,571,433		)	(1,525,298		)
Net property, plant, and equipment	3,123,084			3,120,400
Construction work in progress	96,725			66,069
Total utility plant, net	3,219,809			3,186,469
Current assets
Cash and cash equivalents	7,310			65,705
Restricted cash and cash equivalents	144,150			9,263
Customer accounts receivable (less allowance for doubtful accounts of $3,957 in 2016 and $2,674 in 2015)	46,503			43,255
Accounts receivable - affiliate	3,812			1,908
Other accounts receivable	25,245			27,553
Unbilled revenue	46,419			33,995
Fuel inventory, at average cost	38,023			72,838
Material and supplies, at average cost	79,469			76,731
Energy risk management assets	13,989			7,673
Accumulated deferred fuel	19,543			12,910
Cash surrender value of company-owned life insurance policies	20,155			20,003
Prepayments	6,707			6,309
Regulatory assets	19,362			14,117
Other current assets	—			337
Total current assets	470,687			392,597
Equity investment in investee	19,272			16,822
Prepayments	4,656			4,542
Restricted cash and cash equivalents	24,270			16,174
Regulatory assets - deferred taxes, net	230,523			236,941
Regulatory assets	269,397			284,689
Intangible asset	66,711			74,963
Other deferred charges	14,133			20,534
Total assets	$	4,319,458		$	4,233,731
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

(Continued on next page)



CLECO HOLDINGS
CLECO POWER		2016 2ND QUARTER FORM 10-Q



CLECO POWER

Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT JUNE 30, 2016		AT DEC. 31, 2015
Liabilities and member’s equity
Member’s equity	$	1,527,541	$	1,552,404
Long-term debt, net	1,224,624		1,234,433
Total capitalization	2,752,165		2,786,837
Current liabilities
Long-term debt due within one year	20,007		19,421
Accounts payable	92,595		88,235
Accounts payable - affiliate	6,432		6,598
Customer deposits	56,328		55,233
Provision for rate refund	3,618		2,696
Provision for merger commitments	142,003		—
Taxes payable	5,916		17,045
Interest accrued	8,915		7,813
Energy risk management liabilities	371		275
Regulatory liabilities - other	—		312
Other current liabilities	12,159		10,078
Total current liabilities	348,344		207,706
Commitments and Contingencies (Note 12)
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	1,016,256		1,043,531
Accumulated deferred investment tax credits	2,998		3,245
Postretirement benefit obligations	154,985		152,152
Restricted storm reserve	16,775		16,177
Other deferred credits	27,935		24,083
Total long-term liabilities and deferred credits	1,218,949		1,239,188
Total liabilities and member’s equity	$	4,319,458	$	4,233,731
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.



CLECO HOLDINGS
CLECO POWER		2016 2ND QUARTER FORM 10-Q



CLECO POWER

Condensed Consolidated Statements of Cash Flows (Unaudited)
	FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2016			2015
Operating activities
Net (loss) income	$	(40,350	)	$	60,418
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	79,059			75,591
Gain on sale of asset	(1,095		)	—
Allowance for equity funds used during construction	(1,472		)	(1,537		)
Net deferred income taxes	(22,438		)	34,583
Deferred fuel costs	(6,740		)	7,251
Provision for merger commitments	150,840			—
Changes in assets and liabilities
Accounts receivable	(6,914		)	(8,204		)
Accounts and notes receivable, affiliate	(680		)	5,857
Unbilled revenue	(12,425		)	(4,866		)
Fuel inventory and materials and supplies	32,077			4,973
Prepayments	(512		)	(867		)
Accounts payable	(13,238		)	(22,311		)
Accounts and notes payable, affiliate	(4,129		)	(2,619		)
Customer deposits	6,129			6,104
Postretirement benefit obligations	2,426			3,533
Regulatory assets and liabilities, net	8,854			8,764
Other deferred accounts	(231		)	(6,409		)
Taxes accrued	(11,129		)	18,949
Interest accrued	1,102			1,099
Other operating	5,056			1,888
Net cash provided by operating activities	164,190			182,197
Investing activities
Additions to property, plant, and equipment	(85,936		)	(78,010		)
Allowance for equity funds used during construction	1,472			1,537
Proceeds from sale of property	2,091			—
Contributions to equity investment in investee	(2,450		)	(840		)
Transfer of cash to restricted accounts, net	(142,983		)	(41		)
Other investing	157			459
Net cash used in investing activities	(227,649		)	(76,895		)
Financing activities
Draws on credit facility	15,000			20,000
Payments on credit facility	(15,000		)	(40,000		)
Repayment of long-term debt	(8,546		)	(43,053		)
Contributions from parent	50,000			—
Distributions to parent	(35,000		)	(60,000		)
Other financing	(1,390		)	(1,348		)
Net cash provided by (used in) financing activities	5,064			(124,401		)
Net decrease in cash and cash equivalents	(58,395		)	(19,099		)
Cash and cash equivalents at beginning of period	65,705			39,162
Cash and cash equivalents at end of period	$	7,310		$	20,063

Supplementary cash flow information
Interest paid, net of amount capitalized	$	35,746		$	36,394
Income taxes (refunded) paid, net	$	(485	)	$	565
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	19,571		$	7,639
Additions to property, plant, and equipment - ARO	$	961		$	—
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.



CLECO HOLDINGS
CLECO POWER		2016 2ND QUARTER FORM 10-Q



CLECO POWER

Condensed Consolidated Statements of Changes in Member’s Equity (Unaudited)
(THOUSANDS)	MEMBER’S EQUITY			AOCI			TOTAL MEMBER’S EQUITY
Balances, Dec. 31, 2015	$	1,569,496		$	(17,092	)	$	1,552,404
Other comprehensive income, net of tax	—			487			487
Contributions from parent	50,000			—			50,000
Distributions to parent	(35,000		)	—			(35,000		)
Net loss	(40,350		)	—			(40,350		)
Balances, June 30, 2016	$	1,544,146		$	(16,605	)	$	1,527,541
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.



CLECO HOLDINGS
CLECO POWER		2016 2ND 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 Holdings and Cleco Power
Note 2	Business Combinations	Cleco Holdings
Note 3	Recent Authoritative Guidance	Cleco Holdings and Cleco Power
Note 4	Regulatory Assets and Liabilities	Cleco Holdings and Cleco Power
Note 5	Fair Value Accounting	Cleco Holdings and Cleco Power
Note 6	Debt	Cleco Holdings and Cleco Power
Note 7	Pension Plan and Employee Benefits	Cleco Holdings and Cleco Power
Note 8	Income Taxes	Cleco Holdings and Cleco Power
Note 9	Disclosures about Segments	Cleco Holdings
Note 10	Regulation and Rates	Cleco Holdings and Cleco Power
Note 11	Variable Interest Entities	Cleco Holdings and Cleco Power
Note 12	Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees	Cleco Holdings and Cleco Power
Note 13	Affiliate Transactions	Cleco Holdings and Cleco Power
Note 14	Accumulated Other Comprehensive Loss	Cleco Holdings and Cleco Power
Note 15	Intangible Assets and Goodwill	Cleco Holdings and Cleco Power

Notes to the Unaudited Condensed Consolidated Financial Statements

Note 1 — Summary of Significant Accounting Policies

Principles of Consolidation

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

Basis of Presentation

~~The~~On ~~condensed~~April ~~consolidated~~13, ~~financial~~2016, ~~statements~~Cleco ofHoldings ~~Cleco~~completed ~~Corporation~~its ~~and~~merger ~~Cleco~~with ~~Power~~Merger ~~have~~Sub ~~been~~whereby ~~prepared~~Merger inSub ~~accordance~~merged with ~~GAAP~~and ~~for~~into ~~interim~~Cleco ~~financial~~Corporation, ~~information~~with ~~and~~Cleco ~~with~~Corporation surviving the ~~instructions~~Merger, and Cleco Corporation converting to ~~Form~~a ~~10-Q~~limited liability company and ~~Regulation~~changing ~~S-X. Accordingly,~~its ~~these~~name ~~condensed~~to ~~consolidated~~Cleco ~~financial~~Holdings, ~~statements~~as doa ~~not~~direct, ~~include~~wholly ~~all~~owned subsidiary of ~~the~~Cleco ~~information~~Group and ~~notes~~an ~~required~~indirect, bywholly ~~GAAP~~owned ~~for~~subsidiary ~~annual~~of ~~financial~~Cleco ~~statements~~Partners. ~~Because~~ At the ~~interim~~effective ~~condensed~~time ~~consolidated~~of ~~financial~~the ~~statements~~Merger ~~and~~each ~~the~~outstanding ~~accompanying~~share ~~notes~~of doCleco ~~not~~Corporation ~~include~~common ~~all~~stock, ofpar ~~the~~value ~~information~~$1.00 ~~and~~per ~~notes~~share ~~required~~(other bythan ~~GAAP~~shares ~~for~~that ~~annual~~were ~~financial~~owned ~~statements~~by Cleco Corporation, ~~the~~Cleco ~~condensed~~Partners, ~~consolidated~~Merger ~~financial~~Sub, ~~statements~~or ~~and~~any other ~~information~~direct ~~included~~or inindirect ~~this~~wholly ~~quarterly~~owned ~~report~~subsidiary ~~should~~of beCleco ~~read~~Partners inor ~~conjunction~~Cleco ~~with~~Corporation), were cancelled and were converted into the ~~consolidated~~right ~~financial~~to ~~statements~~receive ~~and~~$55.37 ~~accompanying~~per ~~notes~~share in ~~Cleco’s~~cash, ~~combined~~without ~~Form~~interest, ~~10-K~~with ~~for~~all dividends payable before the ~~year~~effective ~~ended~~time ~~December~~of ~~31,~~the ~~2012~~Merger.

~~These~~Cleco ~~condensed~~Holdings ~~consolidated~~has ~~financial~~accounted ~~statements,~~for inthe merger transaction by applying the ~~opinion~~acquisition method of ~~management,~~accounting. ~~reflect~~The ~~all~~objective ~~normal~~of ~~recurring~~the ~~adjustments~~acquisition ~~that~~method ~~are,~~is into establish a new accounting basis for the ~~opinion~~acquiree, ofCleco ~~management~~Holdings and its subsidiaries, ~~necessary~~and requires the acquirer, Cleco Group, to ~~fairly~~recognize ~~present~~and measure the ~~financial~~acquiree’s ~~position~~assets and ~~results~~liabilities ofat ~~operations~~fair value as of ~~Cleco. Amounts~~the ~~reported~~acquisition indate. Cleco Power’s ~~interim~~assets ~~financial~~and ~~statements~~liabilities ~~are~~were ~~not~~recorded ~~necessarily~~at ~~indicative~~historical ofcost ~~amounts~~since ~~expected~~Cleco ~~for~~did ~~the~~not ~~annual~~elect ~~periods~~pushdown ~~due~~accounting toat the ~~effects~~Cleco ofPower ~~seasonal~~level. ~~temperature~~The ~~variations~~financial onstatements ~~energy~~and ~~consumption,~~accompanying ~~regulatory~~footnotes ~~rulings,~~for ~~the~~Cleco ~~timing~~have ofbeen ~~maintenance~~segregated onto ~~electric~~present ~~generating~~pre-merger ~~units,~~activity ~~changes~~as inthe ~~mark~~“Predecessor” and post-~~to-market~~merger ~~valuations,~~activity ~~changing~~as ~~commodity~~the ~~prices,~~“Successor.” ~~and~~The ~~other~~predecessor ~~factors~~period is not comparable to the successor period.

InThe ~~preparing~~Condensed Consolidated Financial Statements of Cleco Holdings and Cleco Power have been prepared in accordance with GAAP for interim financial ~~statements~~information ~~that~~and ~~conform~~with the instructions to ~~GAAP~~the Form 10-Q and Regulation S-X. Accordingly, ~~management~~these ~~must~~Condensed ~~make~~Consolidated ~~estimates~~Financial Statements do not include all of the information and ~~assumptions~~notes ~~that~~required ~~affect~~by GAAP for annual financial statements. The year-end Condensed Consolidated Balance Sheet data was derived from audited financial statements. Because the ~~reported~~interim ~~amounts~~Condensed Consolidated Financial Statements and the accompanying notes do not include all of ~~assets~~the information and ~~liabilities~~notes required by GAAP for annual financial statements, the ~~reported~~Condensed ~~amounts~~Consolidated ofFinancial ~~revenues~~Statements and ~~expenses,~~other information included in this quarterly report should be read in conjunction with the Consolidated Financial Statements and accompanying notes in the Registrants’ Combined Annual Report on Form 10-K for the year ended December 31, 2015.

~~disclosure~~These Condensed Consolidated Financial Statements, in the opinion of ~~contingent~~management, ~~assets~~reflect ~~and~~all ~~liabilities~~normal atrecurring adjustments that are necessary to fairly present the ~~date~~financial position and results of ~~the~~operations of Cleco. Amounts reported in Cleco’s interim financial statements~~. Actual~~ ~~results~~are ~~could~~not ~~differ~~necessarily ~~from~~indicative ~~those~~of ~~estimates. For~~amounts ~~more~~expected ~~information~~for the annual periods due to the effects of seasonal temperature variations on ~~recent~~energy ~~authoritative~~consumption, ~~guidance~~regulatory ~~and~~rulings, ~~its~~the ~~effect~~timing of maintenance on ~~financial~~electric ~~results~~generating units, ~~see~~changes ~~Note~~in 2mark-to-market —valuations, ~~“Recent~~changing ~~Authoritative~~commodity ~~Guidance~~prices, effects of the completion of the Merger, discrete income tax items, and other factors.”

In preparing financial statements that conform to GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. For information on recent authoritative guidance and its effect on financial results, see Note 3 — “Recent Authoritative Guidance.”



CLECO HOLDINGS
CLECO POWER		2016 2ND QUARTER FORM 10-Q

Reclassifications

Reclassifications have been made to the 2015 financial statements to conform them to the presentation used in the 2016 financial statements. Cleco and Cleco Power’s Condensed Consolidated Balance Sheets for the year ended December 31, 2015, have been adjusted to reflect credit facility debt issuance costs as Other deferred charges as compared to Long-term debt, net as presented in the prior year. The amount of the reclassification was $0.7 million and $0.4 million for Cleco and Cleco Power, respectively. These reclassifications had no effect on Cleco or Cleco Power’s net income or equity.

Goodwill

Goodwill is the excess of the purchase price (consideration transferred and liabilities assumed) over the estimated fair value of net assets of the acquired business and is not subject to amortization. Goodwill will be tested annually in the third quarter and whenever an event occurs or circumstances change that would indicate the carrying amount may be impaired. If the fair value of Cleco is less than the carrying value, a full valuation of Cleco’s assets and liabilities, conducted as though Cleco were a newly acquired business, would occur. For more information on goodwill, see Note 15 — “Intangible Assets and Goodwill.”

Intangible assets

Intangible assets include Cleco Katrina/Rita’s right to bill and collect storm recovery charges, fair value adjustments on wholesale power supply agreements, and the Cleco trade name. The fair value of the assets are being amortized over their estimated useful lives in a manner that best reflects the economic benefits derived from such assets. The intangible assets related to the power supply agreements have definite lives ranging from 2 years to 19 years. Impairment will be tested if there are events or circumstances that indicate that an impairment analysis should be performed. If such an event or circumstance occurs, intangible impairment testing will be performed prior to goodwill impairment testing. Impairment is calculated as the excess of the asset’s carrying amount over its fair value. For more information on intangible assets, see Note 15 — “Intangible Assets and Goodwill.”

Property, Plant, and Equipment

Property, plant, and equipment ~~consists~~consist primarily of regulated utility generation and energy transmission and distribution 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:~~

(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

Most of the carrying value of Cleco’s assets were determined to be stated at fair value at the Merger date, considering that most of these assets are subject to regulation by the LPSC and FERC. A fair value adjustment was made to record the stepped-up basis for the Coughlin assets, since Cleco Power is able to earn a return on and recover these costs from customers. At the date of the Merger, the gross balance of fixed depreciable assets at Cleco was adjusted to be net of accumulated depreciation, as no accumulated depreciation existed on the date of the Merger. Since

pushdown accounting was not elected at the Cleco Power level, Cleco Power retained its accumulated depreciation. For more information about merger related adjustments to property, plant, and equipment, see Note 2 — “Business Combinations.”

Cleco and Cleco Power’s property, plant, and equipment consisted of:



Cleco
	SUCCESSOR			PREDECESSOR
(THOUSANDS)	AT JUNE 30, 2016			AT DEC. 31, 2015
Utility plants	$	3,371,948		$	4,645,698
Other	4,385			15,514
Total property, plant, and equipment	3,376,333			4,661,212
Accumulated depreciation	(20,990		)	(1,536,158		)
Net property, plant, and equipment	$	3,355,343		$	3,125,054



Cleco Power
(THOUSANDS)	AT JUNE 30, 2016			AT DEC. 31, 2015
Regulated utility plants	$	4,694,517		$	4,645,698
Accumulated depreciation	(1,571,433		)	(1,525,298		)
Net property, plant, and equipment	$	3,123,084		$	3,120,400

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 MAR. 31, 2013		AT DEC. 31, 2012
Diversified Lands’ mitigation escrow	$	97	$	97
Cleco Katrina/Rita’s storm recovery bonds	3,278		8,781
Cleco Power’s future storm restoration costs	5,691		5,343
Total restricted cash and cash equivalents	$	9,066	$	14,221

Cleco and Cleco Power’s restricted cash and cash equivalents consisted of:



Cleco
	SUCCESSOR		PREDECESSOR
(THOUSANDS)	AT JUNE 30, 2016		AT DEC. 31, 2015
Current
Cleco Katrina/Rita’s storm recovery bonds	$	8,348	$	9,263
Cleco Power’s sale of property	1,299		—
Cleco Power’s charitable contributions	1,200		—
Cleco Power’s rate credit escrow	133,303		—
Total current	144,150		9,263
Non-current
Diversified Lands’ mitigation escrow	21		21
Cleco Power’s future storm restoration costs	16,769		16,174
Cleco Power’s charitable contributions	4,803		—
Cleco Power’s rate credit escrow	2,698		—
Total non-current	24,291		16,195
Total restricted cash and cash equivalents	$	168,441	$	25,458

~~CLECO CORPORATION CLECO POWER 2013 1ST QUARTER FORM 10-Q~~27

~~Cleco~~CLECO ~~Katrina/Rita~~HOLDINGS ~~has~~CLECO ~~the~~POWER ~~right~~2016 to2ND ~~bill~~QUARTER ~~and~~FORM 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.10-Q



Cleco Power
(THOUSANDS)	AT JUNE 30, 2016		AT DEC. 31, 2015
Current
Cleco Katrina/Rita’s storm recovery bonds	$	8,348	$	9,263
Sale of property	1,299		—
Charitable contributions	1,200		—
Rate credit escrow	133,303		—
Total current	144,150		9,263
Non-current
Future storm restoration costs	16,769		16,174
Charitable contributions	4,803		—
Rate credit escrow	2,698		—
Total non-current	24,270		16,174
Total restricted cash and cash equivalents	$	168,420	$	25,437

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 administration fees, interest, and principal on storm recovery bonds. During the six months ended June 30, 2016, Cleco Katrina/Rita collected $9.9 million net of administration fees. In March 2016, Cleco Katrina/Rita used $8.5 million for a scheduled storm recovery bond principal payment and $2.3 million for a related interest payment.

On March 14, 2016, Cleco Power sold property for $1.3 million. Cleco Power used the proceeds from the sale to purchase like-kind property; therefore, was required to deposit the proceeds with a third party intermediary. On July 29, 2016, Cleco Power completed the purchase of the like-kind property, and the funds were released to purchase the property.

Included in the Merger Commitments were $6.0 million of charitable contributions to be disbursed over five years and $136.0 million of rate credits to eligible customers. On April 25, 2016, in accordance with the Merger Commitments, Cleco Power established the charitable contribution fund and also deposited the rate credit funds into an escrow account. On April 28, 2016, the LPSC voted to issue the rate credits equally to customers with service as of June 30, 2016, beginning in July 2016.

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 on 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~~. For more information about fair value levels, see Note 45 — “Fair Value Accounting.”

Risk Management

Market risk inherent in Cleco ~~Power~~’s market risk-sensitive instruments and positions includes potential changes in value arising from changes in interest rates and the commodity market prices of power, FTRs, and natural gas in the industry 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, FTRs, and natural gas. Cleco ~~applies~~evaluates ~~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~~activities ~~Power may enter into positions~~ to ~~mitigate~~determine whether the ~~volatility~~market inrisk-sensitive ~~customer~~instruments ~~fuel~~and ~~costs. These~~ positions are required to be 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 FAC and reflected on customers’ bills as a component of the fuel cost adjustment.

Cleco Power may also enter into risk mitigating positions that would not meet the requirements of a normal-purchase, normal-sale transaction in order to attempt to mitigate the volatility in customer fuel costs. These positions would be marked-to-market with the resulting gain or loss recorded on Cleco and Cleco Power’s ~~maintain~~Condensed aConsolidated ~~master~~Balance ~~netting~~Sheets ~~agreement~~as ~~policy~~a ~~and~~component ~~monitor~~of ~~credit~~energy risk ~~exposure~~management ~~through~~assets ~~review~~or liabilities. Such gain or loss would be deferred as a component of ~~counterparty~~deferred ~~credit~~fuel ~~quality,~~assets ~~counterparty~~or ~~credit~~liabilities ~~exposure,~~in ~~and~~accordance ~~counterparty~~with ~~concentration~~regulatory ~~levels~~policy. ~~Cleco~~ ~~manages~~When these ~~risks~~positions byclose, ~~establishing~~actual ~~appropriate~~gains ~~credit~~or ~~and~~losses ~~concentration~~would ~~limits~~be onincluded ~~transactions~~in ~~with~~the ~~counterparties~~FAC and byreflected ~~requiring~~on ~~contractual~~customers’ ~~guarantees,~~bills ~~cash~~as ~~deposits,~~a orcomponent ~~letters~~ of ~~credit~~the ~~from~~fuel ~~counterparties~~cost oradjustment. ~~their~~In ~~affiliates~~June 2015, asthe ~~deemed~~LPSC ~~necessary.~~ approved a long-term natural gas hedging pilot program that requires Cleco Power ~~has~~to ~~agreements~~establish ina ~~place~~proposal ~~with~~for ~~various~~a ~~counterparties~~program that ~~authorize~~will ~~the~~be ~~netting~~designed to provide gas price stability for a minimum of ~~financial~~five ~~buys~~years. ~~and~~This ~~sells~~proposal ~~and~~is ~~contract~~required ~~payments~~to be submitted to ~~mitigate~~the ~~credit~~LPSC ~~risk~~by ~~for~~June ~~transactions~~30, ~~entered~~2018. ~~into~~There ~~for~~were ~~risk~~no ~~management~~open ~~purposes~~natural gas positions at June 30, 2016, or December 31, 2015.

Cleco ~~has~~Power ~~entered~~purchases ~~into~~the ~~various~~majority ~~contracts~~of its FTRs in annual auctions facilitated by MISO during the second quarter of each year and may also purchase additional FTRs in monthly auctions facilitated by MISO. FTRs are derivative instruments which represent economic hedges of future congestion charges that will be incurred in serving Cleco Power’s customer load. FTRs are not designated as hedging instruments for accounting purposes. Cleco Power initially records FTRs at their estimated fair value and subsequently adjusts the carrying value to ~~mitigate~~their estimated fair value at the ~~volatility~~end of each accounting period based on the most recent MISO FTR auction prices. Unrealized gains or losses on FTRs held by Cleco Power are included in ~~interest~~Accumulated ~~rate~~deferred fuel on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets. Realized gains or losses on settled FTRs are recorded in Electric operations or Power purchased for utility customers on Cleco and Cleco Power’s Condensed Consolidated Statements of Income. At June 30, 2016, Cleco and Cleco Power’s Condensed Consolidated Balance Sheets reflected the fair value of open FTR positions of $14.0 million in Energy risk management assets and $0. ~~These~~4 ~~contracts~~million ~~include~~in Energy risk management liabilities, ~~but~~compared ~~are~~to $7.7 million in Energy risk management assets and $0.3 million in Energy risk management liabilities at December 31, 2015. For more information on FTRs, see Note 5 — “Fair Value Accounting — Commodity Contracts.”

~~not~~Cleco ~~limited to, interest rate swaps~~ and ~~treasury rate locks. For these contracts in which~~ Cleco isPower ~~hedging~~maintain ~~the~~a ~~variability~~master ofnetting ~~cash~~agreement ~~flows~~policy ~~related~~and tomonitor ~~forecasted~~credit ~~transactions~~risk ~~that~~exposure ~~qualify~~through asreview ~~cash flow hedges, the changes in the fair value~~ of ~~such~~counterparty ~~derivative~~credit ~~instruments~~quality, ~~are~~aggregate ~~reported~~counterparty incredit ~~other comprehensive income. To qualify for hedge accounting~~exposure, ~~the relationship between the hedging instrument~~ and ~~the~~aggregate ~~hedged~~counterparty ~~item~~concentration ~~must~~levels. beCleco ~~documented~~manages tothese ~~include~~risks ~~the~~by ~~risk~~establishing ~~management~~appropriate ~~objective~~credit and ~~strategy,~~concentration ~~and,~~limits ~~at inception and~~ on antransactions ~~ongoing~~with ~~basis,~~counterparties ~~the~~and ~~effectiveness~~requiring ofcontractual ~~the~~guarantees, ~~hedge in offsetting the changes in the~~ cash ~~flows~~deposits, ~~of the item being hedged. Gains~~ or ~~losses~~letters ~~accumulated in other comprehensive income are reclassified as earnings in the periods in which earnings are affected by the variability~~ of ~~the~~credit ~~cash~~from ~~flows~~counterparties ofor ~~the~~their 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 customersaffiliates, ~~then they will be recognized~~ as adeemed ~~regulatory asset or liability and amortized to earnings over the life of the related debt~~necessary. ~~For~~ ~~those contracts in which~~ Cleco isPower ~~hedging~~has ~~the~~agreements ~~variability~~in ofplace ~~cash~~with ~~flows~~various ~~related~~counterparties ~~to forecasted transactions~~ that doauthorize ~~not qualify as cash flow hedges,~~ the ~~changes~~netting ~~in the fair value~~ of ~~such~~financial ~~derivative~~buys ~~instruments~~and ~~will~~sells 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~~contract payments to ~~earnings~~mitigate ~~over~~credit ~~the~~risk ~~life~~for oftransactions ~~the~~entered ~~related~~into ~~debt. For~~for ~~more information on the interest rate~~ risk ~~contracts,~~management ~~see Note 4 — “Fair Value Accounting — Interest Rate Derivatives~~purposes.”

~~Reclassifications~~Cleco may enter into 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 the six

Certain reclassifications have been made to the 2012 financial statements to conform them to the presentation used in the 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.28

~~During~~CLECO ~~the~~HOLDINGS ~~second~~CLECO ~~quarter~~POWER of2016 ~~2012,~~2ND ~~the~~QUARTER ~~Registrants~~FORM 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 for the three months ended March 31, 2012. 10-Q

~~Also~~months ~~during~~ended ~~the~~June 30, ~~second quarter of 2012~~2016, ~~the~~and ~~Registrants determined that an error existed in~~ the ~~statement~~year ofended ~~cash~~December 31, ~~flows presentation of contributions received in aid of construction~~2015, ~~specifically~~Cleco ~~the~~did ~~impact~~not ~~that~~enter ~~the~~into ~~accounting~~any ~~for~~contracts ~~these contributions had on the presentation of cash flows related~~ to ~~the~~mitigate ~~additions of property, plant, and equipment. This caused errors between~~ the ~~operating~~volatility ~~activities~~in ~~section~~interest ~~and~~rate ~~investing activities section for prior periods~~risk.

~~Cleco~~Accounting ~~and Cleco Power’s Condensed Consolidated Statements of Cash Flows~~ for ~~the~~MISO ~~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~~ Transactions

21Cleco Power participates in MISO’s Energy and Operating Reserve market where sales and purchases are netted hourly. If the hourly activity nets to sales, the result is reported in Electric operations on Cleco and Cleco Power’s Condensed Consolidated Statements of Income. If the hourly activity nets to purchases, the result is reported in Power purchased for utility customers on Cleco and Cleco Power’s Condensed Consolidated Statements of Income.

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 MAR. 31,
				2013					2012
(THOUSANDS, EXCEPT SHARES AND PER SHARE AMOUNTS)	INCOME		SHARES	PER SHAREAMOUNT		INCOME		SHARES	PER SHAREAMOUNT
Basic net income applicable to common stock	$	27,133	60,399,697	$	0.45	$	30,031	60,372,567	$	0.50
Effect of dilutive securities
Add: stock option grants			—					13,097
Add: restricted stock (LTICP)			267,704					213,311
Diluted net income applicable to common stock	$	27,133	60,667,401	$	0.45	$	30,031	60,598,975	$	0.50

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-Based Compensation

AtPrior ~~March 31,~~to ~~2013~~the completion of the Merger, Cleco had two stock-based compensation plans,: the ESPP and the ~~LTICP~~LTIP. ~~Substantially~~ ~~all~~As ~~employees, excluding officers and general managers, may choose to participate in the ESPP and purchase~~ a ~~limited~~result ~~amount~~ of ~~common~~the ~~stock~~completion ~~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~~Merger, ~~common~~the ~~stock~~ESPP ~~equivalents,~~ and ~~stock~~the ~~appreciation~~LTIP ~~rights~~were ~~may be granted to certain officers, key employees, or directors of Cleco Corporation and its subsidiaries pursuant to the LTICP~~terminated.

~~During~~Pursuant to the ~~first~~terms ~~quarter~~ of ~~2013,~~the ~~Cleco granted 139~~LTIP,~~048~~ ~~shares of non-vested stock to~~ certain officers, key employees, and directors of Cleco ~~Corporation~~were ~~and~~eligible ~~its subsidiaries pursuant~~ to ~~the~~be ~~LTICP.~~ granted

~~Cleco~~stock options, restricted stock, also known as non-vested stock, common stock equivalents, and stock appreciation rights. For the predecessor period January 1, 2016, through April 12, 2016, Cleco ~~Power~~granted ~~reported~~no ~~pre~~shares of non-~~tax~~vested ~~compensation~~stock pursuant to the LTIP. As a result of the completion of the Merger, all unvested shares outstanding under the LTIP that were granted prior to January 1, 2015, vested at target and were paid out in cash to plan participants. Unvested shares that were granted during 2015 were prorated to the target amount and paid out in cash to plan participants in accordance with the terms of the Merger Agreement. In April 2016, Cleco incurred $2.3 million of merger expense due to the accelerated vesting of the LTIP shares for ~~their~~the ~~share-based~~predecessor ~~compensation~~period. ~~plans~~For asmore ~~shown~~information inabout the ~~following~~Merger, ~~table:~~see Note 2 — “Business Combinations.”

	CLECO CORPORATION				CLECO POWER
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2013		2012		2013		2012
Equity classification
Non-vested stock	$	1,428	$	1,055	$	331	$	214
Stock options	—		5		—		—
Total equity classification	$	1,428	$	1,060	$	331	$	214
Liability classification
Common stock equivalent units	$	1	$	188	$	—	$	83
Total pre-tax compensation expense	$	1,429	$	1,248	$	331	$	297
Tax benefit	$	550	$	480	$	127	$	114

Cleco and Cleco Power reported pretax compensation expense for their share-based compensation plans as shown in the following tables:

Note 2 — Recent Authoritative Guidance



Cleco
	SUCCESSOR		PREDECESSOR				SUCCESSOR		PREDECESSOR
(THOUSANDS)	APR. 13, 2016 - JUNE 30, 2016		APR. 1, 2016 - APR. 12, 2016		FOR THE THREE MONTHS ENDED JUNE 30, 2015		APR. 13, 2016 - JUNE 30, 2016		JAN. 1, 2016 - APR. 12, 2016		FOR THE SIX MONTHS ENDED JUNE 30, 2015
Equity classification
Non-vested stock	$	—	$	2,273	$	1,440	$	—	$	3,241	$	3,225
Tax benefit	$	—	$	874	$	554	$	—	$	1,247	$	1,241



Cleco Power
	FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2016		2015		2016		2015
Equity classification
Non-vested stock	$	645	$	502	$	997	$	946
Tax benefit	$	248	$	193	$	384	$	364



Note 2 — Business Combinations

On April 13, 2016, Cleco Holdings completed its merger with Merger Sub whereby Merger Sub merged with and into Cleco Corporation, with Cleco Corporation surviving the Merger, and Cleco Corporation converting to a limited liability company and changing its name to Cleco Holdings, as a direct, wholly owned subsidiary of Cleco Group and an indirect, wholly owned subsidiary of Cleco Partners. At the effective time of the Merger each outstanding share of Cleco Corporation common stock, par value $1.00 per share (other than shares that were owned by Cleco Corporation, Cleco Partners, Merger Sub, or any other direct or indirect wholly owned subsidiary of Cleco Partners or Cleco Corporation), were cancelled and were converted into the right to receive $55.37 per share in cash, without interest, with all dividends payable before the effective time of the Merger.

Regulatory Matters

On March 28, 2016, the LPSC approved the Merger. The LPSC’s written order approving the Merger was issued on April 7, 2016. Approval of the Merger was conditioned upon certain commitments, including $136.0 million of customer rate credits, a $7.0 million one-time contribution for economic development in Cleco Power’s service territory to be administered by LED or other state agency, $6.0 million of

charitable contributions to be disbursed over five years, and $2.5 million of contributions for economic development for Louisiana state and local organizations to be disbursed over five years. These commitments were accrued on April 13, 2016, and are included in Merger transaction and commitment costs and Merger commitment costs on Cleco and Cleco Power’s Condensed Consolidated Statements of Income, respectively. In addition, the Merger Commitments also included $1.2 million of annual refunds to customers representing cost savings due to the Merger. For more information on the cost savings refunds due to the Merger, see Note 10 — “Regulation and Rates.”

Accounting for the Merger Transaction

The total purchase price consideration was approximately $3.36 billion, which consisted of cash paid to Cleco Corporation shareholders of $3.35 billion and cash paid for Cleco LTIP equity awards of $9.5 million. There were no remaining LTIP equity awards as of the close of the Merger.



CLECO HOLDINGS
CLECO POWER		2016 2ND QUARTER FORM 10-Q

Pushdown accounting was applied to Cleco Holdings, and accordingly, the Cleco Holdings consolidated assets acquired and liabilities assumed were recorded on April 13, 2016, at their estimated fair values as follows:



Preliminary Purchase Price Allocation
(THOUSANDS)	AT APR. 13, 2016
Current assets	$	455,016
Property, plant, and equipment, net	3,432,144
Goodwill	1,490,402
Other long-term assets	1,003,255
Less
Current liabilities	228,515
Net deferred income tax liabilities	1,060,487
Other liabilities	258,204
Long-term debt, net	1,470,126
Total purchase price	$	3,363,485

Cleco Power’s assets and liabilities were recorded at historical cost since Cleco did not elect pushdown accounting at the Cleco Power level.

The following tables present the preliminary fair value adjustments to Cleco Holdings’ balance sheet and recognition of goodwill:



(THOUSANDS)	AT APR. 13, 2016
Property, plant, and equipment	$	(1,334,932	)
Accumulated depreciation	1,565,776
Goodwill	1,490,402
Intangible assets	93,251
Regulatory assets	228,752
Deferred tax liabilities	127,401
Long-term debt	$	198,599

Most of the carrying values of Cleco’s assets and liabilities were determined to be stated at fair value at the Merger date, considering that most of these assets are subject to regulation by the LPSC and FERC. Under such regulation, rates charged to customers are established by a regulator to provide for recovery of costs and a fair return on rate base and are generally measured at historical cost. As such, a market participant would not expect to recover any more or less than the carrying value of the assets. Prior to the Merger, the Coughlin step-up was not recorded on Cleco’s Condensed Consolidated Balance Sheet due to the accounting treatment for the transfer of that asset in March 2014. However, the recovery of the step-up value of the Coughlin asset was approved by the LPSC for recovery in rate base, including a return on that rate base. On the date of the Merger, the step-up value for the Coughlin asset was recognized on Cleco’s Condensed Consolidated Balance Sheet since Cleco Power is able to earn a return on and recover these costs from its customers. The beginning balance of fixed depreciable assets was shown net at the date of the Merger, as no accumulated depreciation existed on the date of the Merger.

The excess of the purchase price over the estimated fair value of assets acquired and the liabilities assumed was $1.49 billion, which was recognized as goodwill by Cleco Holdings at the Merger date. The goodwill represents the potential long-term return of Cleco to its member.

On the date of the Merger, a fair value adjustment was recorded on Cleco’s Condensed Consolidated Balance Sheet to reflect the valuation of the Cleco trade name. This

adjustment is classified as an Intangible asset on Cleco’s Condensed Consolidated Balance Sheet. The valuation of the trade name was estimated by applying the relief-from-royalty method under the income approach. This valuation method is based on the premise that, in lieu of ownership of the asset, a company would be willing to pay a royalty to a third-party for the use of that asset. The owner of the asset is spared this cost, and the value of the asset is estimated by the cost savings. The projected revenue attributed to the trade name was based on projections of Cleco’s wholesale customers. Management is currently evaluating the economic useful life of the trade name. When determined, the trade name intangible asset will be amortized over the useful life. The amortization of the Cleco trade name will be included in Depreciation and amortization on Cleco’s Condensed Consolidated Statement of Income.

On the date of the Merger, fair value adjustments were recorded on Cleco’s Condensed Consolidated Balance Sheet for the difference between the contract price and the market price of long-term wholesale power supply agreements. These adjustments are classified as Intangible assets on Cleco’s Condensed Consolidated Balance Sheet. The valuation of the power supply agreements was estimated using the income approach. The income approach is based upon discounted projected future cash flows associated with the underlying contracts. The intangible assets for the power supply agreements will be amortized over the remaining term of the applicable contract. The amortization of the power supply agreements is included in Electric operations on Cleco’s Condensed Consolidated Statement of Income.

The net increase in deferred tax liabilities on Cleco’s Condensed Consolidated Balance Sheet represents the differences between the assigned fair values of assets acquired and their related income tax basis, net of a deferred tax asset representing the net operating loss carryforward that will be utilized in future periods. As the underlying asset assigned fair values are amortized, the related deferred tax liabilities will be included in income tax expense. Goodwill is not deductible for income tax purposes; therefore, no deferred income tax assets or liabilities were recognized for goodwill.

On the date of the Merger, other fair value adjustments were recorded for long-term debt, SERP deferred losses, and interest rate derivative settlement gains/losses. These fair value adjustments are subject to rate regulation, but do not earn a return. In these instances, a corresponding regulatory asset was established, as the underlying utility asset or liability amounts are recoverable from or refundable to customers at historical cost through the rate setting process. These regulatory assets established to offset fair value adjustments are amortized in amounts and over time frames consistent with the realization or settlement of the fair value adjustments. For more information, see Note 4 — “Regulatory Assets and Liabilities.”

The valuations performed in the second quarter of 2016 to estimate the fair value of assets acquired and liabilities assumed are considered preliminary as a result of the short time period between the closing of the Merger and the end of the second quarter of 2016. Accounting guidance provides that the allocation of the purchase price may be modified up to one year from the date of the Merger, as more information is obtained about the fair value of assets acquired and liabilities assumed. The preliminary amounts recognized are subject to revision until the valuations are completed and to the extent that additional information is obtained about the facts and



CLECO HOLDINGS
CLECO POWER		2016 2ND QUARTER FORM 10-Q

circumstances that existed as of the date of the Merger. Cleco has not yet completed its evaluation and determination of the fair value of certain assets and liabilities acquired, primarily the final valuation and assessment of postretirement benefit plans as of April 13, 2016, and the economic useful life of the Cleco trade name. Cleco expects these final valuations and assessments will be completed by the end of 2016, which may affect the purchase price allocation and could affect goodwill.

Note 3 — Recent Authoritative Guidance

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

In ~~July~~May ~~2012~~2014, FASB ~~issued~~amended the accounting guidance onfor ~~testing~~revenue ~~indefinite-lived~~recognition. ~~intangible~~The ~~assets~~amended guidance affects entities that enter into contracts for ~~impairment~~the transfer of non-financial assets unless those contracts are within the scope of other standards. ~~This~~ The core principle of this guidance is ~~intended~~that toan ~~reduce~~entity ~~costs~~should ~~and~~recognize ~~complexity~~revenue to depict the transfer of ~~testing~~promised ~~indefinite-lived~~goods ~~intangible~~or ~~assets~~services ~~other~~to ~~than~~customers ~~goodwill~~in ~~for~~an ~~impairment. Entities~~amount ~~are~~that ~~allowed~~reflects the consideration to ~~perform~~which athe ~~“qualitative”~~entity ~~assessment~~expects to ~~determine~~be ~~whether~~entitled ~~further~~in ~~impairment~~exchange ~~testing~~for ofthose ~~indefinite-lived~~goods ~~intangible~~or ~~assets~~services. isUnder ~~necessary~~the new guidance, ~~similar~~an entity must identify the performance obligations in ~~approach~~a contract and the transaction price, and allocate the price to specific performance obligations to recognize the ~~goodwill~~revenue ~~impairment~~when ~~test~~the obligation is completed. The ~~adoption~~amendments ofin this update also require disclosure of sufficient information to allow users to understand the nature, amount, timing, and uncertainty of revenue and cash flow arising from contracts. In August 2015, FASB amended the revenue recognition guidance isto provide for a one-year deferral of the effective date. The standard will be effective for annual ~~and~~reporting periods beginning after December 15, 2017, including interim ~~impairment~~periods ~~tests~~within ~~performed~~that ~~for~~reporting ~~fiscal~~period. ~~years~~Earlier application is permitted only as of annual reporting periods beginning after ~~September~~December 15, ~~2012~~2016, including interim reporting periods within that reporting period. ~~The~~ Cleco does not plan to early adopt the amended guidance. Reporting entities have the option of using either a full retrospective or a modified retrospective approach. Management will evaluate the advantages and disadvantages of each transition method before selecting the method of adoption. Management is assessing the potential areas of impact, including the identification of specific contracts that would fall under the scope of this guidance. ~~did~~Management ~~not~~will continue to evaluate the impact of this guidance, but the amended guidance could have ~~any~~a material impact on the results of operations, financial condition, or ~~results~~cash offlows ~~operations~~ of the Registrants.

22In July 2015, FASB issued the accounting guidance to simplify the measurement of inventory. This guidance requires entities to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The adoption of this guidance is effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period. These amendments should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. Management does not expect this guidance to have a significant impact on the results of operations, financial condition, or cash flows of the Registrants.

~~CLECO~~In ~~CORPORATION~~September ~~CLECO~~2015, ~~POWER~~FASB ~~2013~~amended ~~1ST~~the ~~QUARTER~~business ~~FORM~~combinations 10guidance to simplify the accounting for measurement-Qperiod adjustments. This guidance eliminates

Inthe ~~February~~requirement ~~2013,~~to ~~FASB~~retrospectively ~~clarified~~account ~~the~~for ~~scope~~these ofadjustments. ~~revised~~The ~~disclosure~~adoption ~~requirements~~of ~~related~~this toguidance ~~balance~~is ~~sheet~~effective ~~offsetting~~for ~~that~~fiscal ~~was~~years ~~issued~~beginning inafter December ~~2011~~15, 2015, including interim periods within those fiscal years. ~~The~~ This amendment ~~clarifies~~should ~~that~~be ~~the~~applied ~~scope~~prospectively ~~applies~~ to ~~derivatives~~adjustments ~~accounted~~to ~~for~~provisional inamounts ~~accordance~~that ~~with~~occur after the ~~authoritative~~effective ~~guidance~~date ~~for~~with ~~derivatives~~earlier ~~and~~application ~~hedging~~permitted. ~~The~~ ~~adoption~~Cleco ofwas subject to this ~~revision~~guidance isstarting ~~required~~January ~~for~~1, ~~interim~~2016. ~~and~~As ~~annual~~a ~~periods~~result ~~beginning~~of onthe orMerger ~~after~~on ~~January~~April 113, ~~2013. The~~2016, ~~adoption~~Cleco ofadopted this ~~revision~~guidance ~~did~~and does not expect it to have ~~any~~a material impact on the results of operations, financial condition, or ~~results~~cash offlows ~~operations~~ of the Registrants ~~because~~as ita ~~relates~~result toof ~~disclosures,~~provisional ~~and~~merger noadjustments ~~additional~~in ~~disclosures~~future ~~were required~~periods.

In ~~February~~January ~~2013~~2016, FASB ~~revised~~amended the ~~disclosure~~guidance ~~requirements~~for ~~related~~recognition toand ~~items~~measurement ~~reclassified out~~ of ~~accumulated~~financial ~~other~~assets ~~comprehensive~~and ~~income~~liabilities. ~~This~~ ~~guidance~~These isamendments ~~intended~~address tocertain ~~improve~~aspects ~~the~~of ~~transparency~~recognition, ofmeasurement, ~~changes~~presentation, inand ~~OCI~~disclosure of financial instruments. ~~This~~ ~~revision~~The adoption of this guidance is effective for fiscal years beginning after December 15, ~~and~~2017, including interim periods within those years,. Early adoption of certain provisions of this guidance is permitted as of the beginning ~~after~~of ~~December~~the ~~15,~~fiscal ~~2012~~year of adoption. ~~Cleco~~ ~~adopted~~Entities ~~the~~should ~~revisions~~apply these amendments by means of a cumulative-effect adjustment to ~~this~~the ~~amendment~~balance ~~during~~sheet as of the ~~first~~beginning ~~quarter~~of the fiscal year of ~~2013~~adoption. The ~~adoption~~amendments ofrelated ~~this~~to ~~revision~~equity ~~did~~securities ~~not~~without ~~have~~readily ~~any~~determinable ~~impact~~fair onvalue ~~the~~should ~~financial~~be ~~condition~~applied orprospectively ~~results~~to ofequity ~~operations~~investments that exist as of the ~~Registrants~~date ~~because~~of itadoption. ~~relates~~Management todoes ~~disclosures. For~~not ~~more~~expect ~~information~~this onguidance ~~items~~to ~~reclassified~~have ~~out~~a ofsignificant ~~accumulated~~impact ~~other~~on ~~comprehensive~~the ~~income~~results of operations, ~~see~~financial ~~Note~~condition, 14or —cash ~~“Accumulated~~flows ~~Other~~of ~~Comprehensive~~the ~~Loss~~Registrants.”

In ~~March~~February ~~2013~~2016, FASB ~~issued~~amended the guidance ~~for~~to ~~the~~account ~~recognition,~~for ~~measurement,~~leases. ~~and~~This ~~disclosure~~guidance ofis ~~obligations~~intended ~~resulting~~to ~~from~~increase ~~joint~~transparency and ~~several~~comparability ~~liability~~among ~~arrangements~~organizations ~~for~~by ~~which~~recognizing ~~the~~lease ~~total~~assets ~~amount~~and oflease liabilities on the ~~obligation~~balance issheet ~~fixed~~and atdisclosing ~~the~~key ~~reporting~~information ~~date~~about leasing arrangements. The adoption of this guidance is effective for fiscal years beginning after December 15, ~~and~~2018, including interim periods within those years. Early adoption is permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning ~~after~~of ~~December~~the ~~15,~~earliest ~~2013~~period presented using a modified retrospective approach. The ~~adoption~~modified retrospective approach includes practical expedients that may be elected by entities. Management will continue to evaluate the impact of this guidance, isbut ~~not~~the ~~expected~~amended toguidance could have a material impact on the results of operations, financial condition, or ~~results~~cash offlows ~~operations~~ of the Registrants.

~~Note~~In 3March —2016, ~~Regulatory~~FASB ~~Assets~~amended the derivatives and ~~Liabilities~~hedging accounting guidance to address the effect of derivative contract novations on existing hedge accounting relationships. The amended guidance clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require dedesignation of the hedging relationship provided that all other hedge accounting criteria continue to be met. The adoption of this guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those years. Entities have the option to apply these amendments on either a prospective basis or a modified retrospective basis. This guidance will not have an impact on the results of operations, financial condition, or cash flows of the Registrants.

~~Cleco~~In ~~Power~~March ~~follows~~2016, ~~the~~FASB ~~authoritative~~amended ~~guidance~~the onderivatives ~~regulated~~and ~~operations,~~hedging ~~which~~accounting ~~allows~~guidance ~~utilities~~related to ~~capitalize~~contingent orput ~~defer certain costs based on regulatory approval~~ and ~~management’s~~call ~~ongoing~~options ~~assessment~~in ~~that~~debt itinstruments. isThis ~~probable~~guidance ~~these~~clarifies ~~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:~~

(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

~~Tree~~CLECO ~~Trimming~~HOLDINGS ~~Costs~~CLECO POWER 2016 2ND QUARTER FORM 10-Q

Inrequirements ~~January~~for ~~2008,~~assessing ~~the~~whether ~~LPSC~~contingent ~~approved~~put ~~Cleco~~and ~~Power’s~~call ~~request~~options tothat ~~establish~~can aaccelerate ~~regulatory~~the ~~asset~~payment ~~for~~of ~~costs~~principal ~~incurred~~on debt instruments are clearly and closely related to ~~trim,~~their ~~cut,~~debt orhosts. ~~remove~~Entities ~~trees~~performing ~~that~~the ~~were~~assessment ~~damaged~~will bybe ~~hurricanes~~required ~~Katrina~~to assess the embedded put and ~~Rita,~~call ~~but~~options ~~were~~solely ~~not~~in ~~addressed~~accordance aswith ~~part~~the offour-step decision sequence clarified in the ~~restoration~~amended ~~efforts~~guidance. The ~~regulatory~~adoption ~~asset~~of ~~was~~this ~~capped~~guidance atis ~~$12.0~~effective ~~million~~for infiscal ~~actual~~years ~~expenditures~~beginning ~~plus~~after aDecember ~~12.4%~~15, ~~grossed-up~~2016, ~~rate~~including ofinterim ~~return~~periods within those years. ~~Recovery~~ ofEntities ~~these~~should ~~expenditures~~apply ~~was~~these ~~requested~~amendments inon ~~Cleco~~a ~~Power’s~~modified ~~base~~retrospective ~~rate~~basis ~~application~~to ~~filed~~existing indebt ~~July~~instruments ~~2008~~as ~~and~~of ~~was~~the ~~approved~~beginning byof the ~~LPSC~~fiscal inyear ~~October~~for ~~2009~~which the amendments are effective. In ~~February~~Management ~~2010,~~is ~~Cleco~~evaluating ~~Power~~the ~~began~~impact ~~amortizing~~that the ~~regulatory~~adoption ~~asset~~of ~~over~~this aguidance ~~five-year~~will ~~period~~have on the results of operations, financial condition, or cash flows of the Registrants.

OnIn ~~January~~March 292016, ~~2013,~~FASB ~~Cleco~~amended ~~Power~~the ~~requested~~accounting guidance to ~~expend~~simplify ~~and~~the ~~defer~~transition up to $8the equity method of accounting.0 ~~million~~This inguidance ~~additional~~impacts ~~tree~~entities ~~management~~that ~~costs. Cleco~~have ~~Power~~an ~~requested~~investment ~~similar~~that ~~accounting~~becomes ~~treatment~~qualified for the equity method of accounting as ~~authorized~~a result of an increase in the ~~initial~~level ~~tree~~of ~~extraction~~ownership ~~request~~interest ~~and~~or ~~requested~~degree ~~authorization~~of toinfluence. ~~accrue~~This ~~actual~~amended ~~expenditures~~guidance toeliminates athe ~~regulatory~~requirement ~~asset~~to ~~through~~retroactively adopt the ~~completion~~equity ~~date~~method of ~~the~~accounting. ~~tree~~The ~~extraction~~adoption ~~effort. Cleco~~of ~~Power~~this ~~anticipates~~guidance ais ~~completion~~effective ~~date~~for offiscal years beginning after December 3115, ~~2014~~2016, ~~for~~including ~~this~~interim ~~phase~~periods within those years. Early adoption is permitted. These amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that results in the ~~tree~~adoption ~~extraction~~of ~~project~~the equity method. ~~The~~ ~~LPSC~~Management ~~approved~~does not expect this ~~request~~guidance to have any impact on ~~April~~the 4results of operations, ~~2013~~financial condition, or cash flows of the Registrants.

~~Construction~~In ~~Carrying~~March ~~Costs~~2016, FASB amended the stock compensation guidance to provide for improvements to employee share-based payment accounting. The adoption of this guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those periods. Early adoption is permitted. On April 13, 2016, Cleco Holdings completed the Merger and no longer has common stock; as a result, this guidance will not have an impact on the results of operations, financial condition, or cash flows of the Registrants.

In ~~February~~June ~~2006~~2016, FASB amended the ~~LPSC~~guidance ~~approved~~for ~~Cleco~~the ~~Power’s~~measurement ~~plans~~of tocredit ~~build~~losses ~~Madison~~on ~~Unit~~financial 3instruments. ~~Terms~~ ofThe ~~the~~guidance ~~approval~~affects ~~included~~entities ~~authorization~~holding ~~for~~financial ~~Cleco~~assets ~~Power~~and tonet ~~collect~~investment ~~from~~in ~~customers~~leases athat ~~portion~~are ofnot ~~the~~accounted ~~carrying~~for ~~costs~~at offair ~~capital~~value ~~during~~through ~~the~~net ~~construction~~income. ~~phase~~The ofguidance ~~the~~affects ~~unit. Cleco~~loans, ~~Power’s~~debt ~~retail~~securities, ~~rate~~trade ~~plan~~receivables, ~~established~~net ~~that~~investments ~~Cleco~~in ~~Power~~leases, ~~return~~off-balance-sheet ~~carrying~~credit ~~costs~~exposures, toreinsurance ~~customers~~receivables, and ~~record~~any aother ~~regulatory~~financial ~~asset~~assets ~~for~~not ~~all~~excluded ~~carrying~~from ~~costs~~the ~~incurred~~scope bythat ~~Cleco~~have ~~Power above~~ the ~~actual~~contractual ~~amount~~right ~~collected~~to ~~from~~receive ~~customers~~cash. ~~These~~ ~~costs~~The ~~are~~adoption ~~being~~of ~~amortized~~this ~~over~~guidance ais ~~four-year~~effective ~~period. As~~for offiscal ~~March 31~~years beginning after December 15, ~~2013~~2019, ~~Cleco~~including ~~Power~~interim ~~had~~periods ~~returned~~within ~~$163~~those years.~~1 million~~ toEarly ~~customers~~adoption is permitted. At ~~March 31,~~Management ~~2013,~~does ~~$3.3~~not ~~million~~expect isthis ~~due~~guidance to behave ~~returned~~any toimpact ~~customers~~on ~~within~~the ~~one~~results ~~year.~~of operations, financial condition, or cash flows of the Registrants.

23Note 4 — Regulatory Assets and Liabilities

~~CLECO~~Cleco ~~CORPORATION~~capitalizes ~~CLECO~~or ~~POWER~~defers ~~2013~~certain ~~1ST~~costs ~~QUARTER~~for ~~FORM~~recovery ~~10-Q~~from customers and recognizes a liability for amounts expected to be returned to customers based on regulatory approval and management’s ongoing assessment that it is probable these items will be recovered or refunded through the ratemaking process.

~~Power~~Under ~~Purchase~~the ~~Agreement~~current ~~Capacity~~regulatory ~~Costs~~environment, Cleco believes these regulatory assets will be fully recoverable; however, if in

Inthe ~~March 2012~~future, ~~Cleco~~as ~~Power~~a ~~received~~result ~~approval~~of ~~from~~regulatory ~~the~~changes ~~LPSC~~or ~~for~~competition, aCleco’s ~~three-year~~ability ~~power~~to ~~purchase~~recover ~~agreement~~these ~~with~~regulatory ~~Evangeline~~assets ~~providing~~would ~~730~~no MWlonger ofbe ~~capacity~~probable, ~~and~~then ~~energy~~to ~~beginning~~the ~~May 1, 2012,~~extent ~~and~~that ~~ending~~such ~~April~~regulatory ~~30,~~assets ~~2015. The~~were ~~LPSC~~determined ~~order~~not ~~allows~~to be recoverable, Cleco ~~Power~~would be required to ~~defer~~write-down ~~and~~such ~~recover~~assets. aIn ~~portion~~addition, potential deregulation of ~~capacity~~the ~~costs~~industry ~~associated~~or ~~with~~possible future changes in the ~~power~~method ~~purchase~~of ~~agreement. The~~rate ~~deferred~~regulation ~~costs~~of ~~are~~Cleco ~~being~~could ~~collected~~require ~~over~~discontinuance of the ~~term~~application of ~~the~~these ~~contract~~authoritative guidelines.

~~AMI~~The ~~Deferred~~following ~~Revenue~~table ~~Requirement~~summarizes Cleco Power’s regulatory assets and liabilities:

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.



(THOUSANDS)	AT JUNE 30, 2016		AT DEC. 31, 2015
Regulatory assets – deferred taxes, net	$	230,523	$	236,941
Mining costs	7,647		8,921
Interest costs	5,041		5,221
AROs	1,789		2,462
Postretirement costs	145,667		150,274
Tree trimming costs	4,960		6,318
Training costs	6,785		6,863
Surcredits, net	7,878		9,661
Amended lignite mining agreement contingency	—		3,781
AMI deferred revenue requirement	5,045		5,318
Production operations and maintenance expenses	9,741		12,436
AFUDC equity gross-up	70,690		71,444
Acadia Unit 1 acquisition costs	2,495		2,548
Financing costs	8,847		9,032
Biomass costs	34		50
MISO integration costs	1,872		2,340
Coughlin transaction costs	1,014		1,030
Corporate franchise tax	2,616		373
Acadia FRP true-up	—		377
MATS costs	5,694		—
Other	944		357
Total regulatory assets	288,759		298,806
PPA true-up	—		(312		)
Fuel and purchased power	19,543		12,910
Total regulatory assets, net	$	538,825	$	548,345

~~Fuel~~The ~~and~~following ~~Purchased~~table ~~Power~~summarizes ~~Costs~~Cleco’s net regulatory assets and liabilities:

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



	SUCCESSOR ⁽¹⁾		PREDECESSOR
(THOUSANDS)	AT JUNE 30, 2016		AT DEC. 31, 2015
Total Cleco Power regulatory assets, net	$	538,825	$	548,345
Cleco Holdings’ Merger adjustments
Fair value of long-term debt	185,113		—
Postretirement costs	20,513		—
Financing costs	9,138		—
Debt issuance costs	8,795		—
Total Cleco regulatory assets, net	$	762,384	$	548,345

~~pass~~(1)Cleco onHoldings’ toregulatory ~~its~~assets ~~customers~~include ~~substantially~~acquisition ~~all~~accounting ~~such~~adjustments ~~charges. For~~as ~~the~~a ~~three~~result ~~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~~Merger.

~~The~~Amended ~~$3.9~~Lignite ~~million~~Mining ~~decrease~~Agreement ~~in the under-recovered costs was primarily due to a decrease in fuel and purchased power costs.~~ Contingency

~~Note~~The 4provisions —of ~~Fair~~the ~~Value~~Amended ~~Accounting~~Lignite Mining Agreement between Cleco Power, SWEPCO and DHLC include a requirement that if DHLC is unable to pay for loans and lease payments when due, Cleco Power and SWEPCO each will pay 50% of the amounts due. Any payments under this provision will be considered a prepayment of lignite to be delivered in the future and will be credited to future invoices from DHLC.

The amounts reflected in Cleco and Cleco Power’s Condensed Consolidated Balance Sheets at March 31, 2013 and December 31, 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. 32

~~The~~CLECO ~~following~~HOLDINGS ~~tables~~CLECO ~~summarize~~POWER ~~the~~2016 ~~carrying~~2ND ~~value~~QUARTER ~~and~~FORM ~~estimated market value of Cleco and Cleco Power’s financial instruments subject to fair value accounting.~~10-Q

Cleco
	AT MAR. 31, 2013				AT DEC. 31, 2012
(THOUSANDS)	CARRYINGVALUE		ESTIMATEDFAIR VALUE		CARRYINGVALUE		ESTIMATEDFAIR VALUE
Financial instruments not marked-to-market:
Cash and cash equivalents	$	46,467	$	46,467	$	31,020	$	31,020
Restricted cash and cash equivalents	$	9,066	$	9,066	$	14,221	$	14,221
Long-term debt, excluding debt issuance costs	$	1,328,069	$	1,534,758	$	1,345,198	$	1,579,674

Previously, Cleco Power recorded a liability of $3.8 million related to the amended agreement with an offsetting regulatory asset due to Cleco Power’s ability to recover prudent fuel costs from customers through the FAC. Management determined that it does not expect to be required to pay DHLC under this guarantee. As a result of this determination, the liability and the offsetting regulatory asset were remeasured to zero.

Cleco Power
	AT MAR. 31, 2013				AT DEC. 31, 2012
(THOUSANDS)	CARRYINGVALUE		ESTIMATEDFAIR VALUE		CARRYINGVALUE		ESTIMATEDFAIR 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

Corporate Franchise Tax

AtAs ~~March 31,~~part ~~2013,~~of ~~Cleco~~the ~~and~~FRP ~~Cleco~~extension ~~Power~~approved ~~were~~by ~~exposed~~the toLPSC ~~concentrations~~in ofJune ~~credit~~2014, ~~risk~~Cleco ~~through~~Power ~~their~~was ~~short-term~~authorized ~~investments~~to ~~classified~~recover asthrough ~~cash~~a ~~equivalents~~rider ~~and~~the ~~restricted~~retail ~~cash~~portion ~~equivalents. Cleco~~of ~~had~~state ~~$48.5~~corporate ~~million~~franchise ~~($39~~taxes paid.6 ~~million~~The retail portion of ~~cash~~state ~~equivalents~~corporate ~~and~~franchise ~~$8.9~~taxes ~~million~~paid ofeach ~~restricted~~year ~~cash~~is ~~equivalents)~~recovered inover ~~short~~a 12-~~term~~month ~~investments~~period inbeginning ~~institutional~~on ~~money~~July ~~market funds~~1. Cleco Power’s ~~had~~retail ~~$46.4~~portion ~~million~~of ~~($37.6~~state ~~million~~corporate offranchise ~~cash~~taxes ~~equivalents~~paid ~~and~~in April 2016 was $82.85 million. ofAdditionally, ~~restricted~~Cleco ~~cash~~Power ~~equivalents)~~had ina ~~short-term~~regulatory ~~investments~~asset inof ~~institutional~~$0.3 ~~money~~million ~~market~~for ~~funds~~amounts undercollected. If ~~the~~The ~~money~~undercollection ~~market~~at ~~funds~~June ~~failed~~30, to2016, ~~perform~~and ~~under~~ the ~~terms~~2016 ofretail ~~the~~portion ~~investments,~~of ~~Cleco~~state ~~and~~corporate ~~Cleco~~franchise ~~Power~~taxes ~~would~~are bebeing ~~exposed~~recovered tofrom acustomers ~~loss~~beginning ofJuly ~~the~~1, ~~invested~~2016. These amounts~~. Collateral~~ onwere ~~these~~partially ~~types~~offset ofby ~~investments~~$0.6 ismillion ~~not~~of ~~required~~amortization byfor ~~either~~the ~~Cleco~~2015 orcorporate ~~Cleco~~franchise ~~Power~~taxes regulatory asset.

~~Restricted~~MATS ~~Investments~~Costs

InOn ~~September~~February ~~2007~~1, 2016, the LPSC ~~authorized~~approved ~~the~~Cleco ~~funding~~Power’s ~~and~~request ~~securitization~~to ofrecover athe ~~$50.0~~revenue ~~million~~requirements ~~reserve~~associated ~~for~~with ~~Cleco~~the ~~Power’s~~installation ~~future~~of ~~storm~~MATS ~~costs~~equipment. On The ~~July~~MATS 1rule, finalized in February 2012, required affected EGUs to meet specific emission standards and work practice standards to address hazardous air pollutants by April 16, 2015. The LPSC approval also allowed Cleco Power ~~transferred~~to record a regulatory asset of $137.01 million ofrepresenting the ~~related~~unrecovered ~~restricted~~revenue ~~cash~~requirements ~~and~~of ~~cash~~the ~~equivalents~~MATS toequipment anplaced ~~outside~~into ~~investment~~service ~~manager. Investments~~in ~~made~~the byyears prior to the ~~investment~~LPSC ~~manager~~review ~~are~~and ~~restricted~~approval. toThis ~~the~~amount ~~criteria~~is ~~established~~being byamortized ~~management~~over inthree ~~Cleco~~years ~~Power’s~~beginning ~~guidelines~~on ~~for~~January ~~short-term~~1, 2016.

~~investments. At March 31, 2013, the investments included cash and cash equivalents and debt securities.~~ Other

~~The~~Cleco ~~cash~~Power’s ~~and~~other ~~cash~~regulatory ~~equivalents~~assets ~~are~~increased ~~reflected~~during inthe six months ended June 30, 2016 as a result of the LPSC’s approval for Cleco Power to recover costs associated with its IRP report filing and its most recently completed fuel audit. Cleco Power incurred $0.6 million of costs related to the IRP report. In April 2016, the LPSC approved Cleco Power’s ~~Condensed~~IRP ~~Consolidated~~report ~~Balance~~filed ~~Sheets~~under atthe ~~March 31,~~IRP ~~2013,~~Order asNo. ~~restricted~~R-30021, ~~cash~~which ~~and~~fostered ~~cash~~a ~~equivalents~~collaborative ~~and~~working ~~approximate~~process ~~fair~~for ~~value~~the ~~because~~development of ~~their~~Cleco ~~short~~Power’s long-term ~~nature~~resource plan covering the planning period of 2015 through 2034. Cleco Power incurred $0.1 million of costs during the audit of fuel and purchased power expenses for the years 2009 through 2013. In October 2015, the LPSC approved the audit report. Cleco Power is recovering both of

~~The~~these ~~debt~~regulatory ~~securities~~assets ~~were~~over ~~recorded~~a 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~~year ~~securities~~period ~~and~~beginning ~~are~~on ~~reported~~July ~~at fair value. Because Cleco Power’s investment strategy for these investments is within the requirements established by the LPSC for the restricted reserve fund~~1, realized and unrealized gains and losses, interest income, investment management fees, and custody fees are recorded directly to Cleco Power’s restricted storm reserve rather than in earnings or other comprehensive income2016. ~~As a result, no amounts will be recorded to other comprehensive income for these investments.~~

24Fuel and Purchased Power

~~CLECO~~The ~~CORPORATION~~cost ~~CLECO~~of ~~POWER~~fuel ~~2013~~used ~~1ST~~for ~~QUARTER~~electric ~~FORM~~generation 10and power purchased for utility customers are recovered through the LPSC-Qestablished FAC or related wholesale contract provisions, which enable Cleco Power to pass on to its customers substantially all such charges. For the three and six months ended June 30, 2016, approximately 77% and 76%, respectively, of Cleco Power’s total fuel cost was regulated by the LPSC.

~~Quarterly,~~Fuel ~~Cleco~~and ~~Power’s~~purchased ~~available-for-sale~~power ~~debt~~increased ~~securities~~$6.6 ~~are~~million ~~evaluated~~during onthe ansix ~~individual~~months ~~basis~~ended toJune ~~determine~~30, if2016. aOf ~~decline~~this inamount, ~~fair~~$9.1 ~~value~~million ~~below~~was due to higher fuel costs and power purchases, the ~~carrying~~timing ~~value~~of iscollections, ~~other~~and customer usage, partially offset by a $2.5 million decrease in the mark-~~than~~to-~~temporary~~market value on FTRs.

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~~Holdings’s ~~impaired~~Merger 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 determines that an other-than-temporary decline in value exists on its debt securities, the investments would be written down Adjustments

toAs ~~fair~~a ~~value~~result ~~with~~of athe ~~new~~Merger, ~~cost~~Cleco ~~basis~~implemented ~~established~~acquisition accounting, which eliminated AOCI at the Cleco Holdings consolidated level. ~~Declines~~ inCleco ~~fair~~will ~~value~~continue ~~below~~to ~~cost~~recover ~~basis~~expenses related to certain postretirement costs; therefore, Cleco recognized a regulatory asset based on its determination that ~~are~~these ~~determined~~costs can continue to be ~~other-than-temporary~~collected ~~would~~from customers. These costs will be ~~recorded~~amortized to ~~Cleco~~Other ~~Power’s~~operations ~~restricted~~expense ~~storm~~over ~~reserve. The~~the ~~unrealized~~average ~~losses~~remaining onservice period of participating employees. Cleco ~~Power’s~~will ~~debt~~also ~~securities~~continue asto ofrecover ~~March 31,~~financing ~~2013,~~costs ~~were~~associated ~~caused~~with bythe ~~interest~~settlement of two treasury rate ~~movements.~~locks ~~Cleco~~and ~~Power~~a ~~does~~forward ~~not~~starting ~~intend~~swap tocontract ~~sell~~that ~~the~~were ~~debt~~previously ~~securities~~recognized ~~and~~in ~~has~~AOCI. ~~determined~~Additionally, itas isa ~~more~~result ~~likely~~of ~~than~~the ~~not~~Merger, a regulatory asset was recorded for debt issuance costs that itwere ~~will~~eliminated ~~not~~at beCleco ~~required~~Holdings toand ~~sell~~a ~~the~~regulatory ~~investments~~asset ~~before~~was ~~recovery~~recorded offor the ~~amortized~~difference ~~cost~~between ~~value. Cleco~~the ~~Power~~carrying ~~determined~~value ~~there~~and ~~were~~the nofair ~~material~~value ~~other~~of long-~~than-temporary~~term ~~impairments~~debt. onThese ~~its~~regulatory ~~debt~~assets ~~securities~~will atbe ~~March 31,~~amortized ~~2013~~over the terms of the related debt issuances.

~~The~~Note ~~following~~5 ~~table~~— ~~provides~~Fair aValue ~~reconciliation of Cleco Power’s available-for-sale debt securities from amortized cost to fair value at March 31, 2013 and December 31, 2012:~~Accounting

	AT MAR. 31, 2013								AT DEC. 31, 2012
(THOUSANDS)	AMORTIZEDCOST		TOTALUNREALIZED GAINS (1)		TOTALUNREALIZEDLOSSES (1)		FAIR VALUE		AMORTIZEDCOST		TOTALUNREALIZED GAINS (1)		TOTALUNREALIZEDLOSSES (1)		FAIR VALUE
Municipal bonds	$	9,567	$	4	$	16	$	9,555	$	10,228	$	3	$	28	$	10,203
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.

The amounts reflected on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets at June 30, 2016, and December 31, 2015, for cash equivalents, restricted cash equivalents, accounts receivable, other accounts receivable, and accounts payable approximate fair value because of their short-term nature.

~~Cleco~~The ~~Power~~following ~~recognized~~tables ~~less~~summarize ~~than~~the ~~$0.1~~carrying ~~million~~value ~~unrealized~~and ~~mark-to-~~estimated market ~~gains~~value inof ~~the~~Cleco ~~restricted~~and ~~storm~~Cleco ~~reserve~~Power’s ~~for~~financial ~~the~~instruments ~~three~~not ~~months~~measured ~~ended~~at ~~March 31,~~fair ~~2013.~~ value on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets:

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:



Cleco
	SUCCESSOR				PREDECESSOR
	AT JUNE 30, 2016				AT DEC. 31, 2015
(THOUSANDS)	CARRYING VALUE		ESTIMATED FAIR VALUE		CARRYING VALUE		ESTIMATED FAIR VALUE
Long-term debt	$	2,785,416	$	2,853,296	$	1,299,529	$	1,463,989

			LESS THAN 12 MONTHS		12 MONTHS OR LONGER
Cleco Power
(THOUSANDS)	AGGREGATE UNREALIZEDLOSS		AGGREGATERELATEDFAIR VALUE		AGGREGATE UNREALIZEDLOSS		AGGREGATERELATEDFAIR VALUE
	AT JUNE 30, 2016				AT DEC. 31, 2015
Municipal bonds	$	16	$	7,034	$	—	$	—
(THOUSANDS)	CARRYINGVALUE		ESTIMATEDFAIR VALUE		CARRYINGVALUE		ESTIMATEDFAIR VALUE
Long-term debt	$	1,250,304	$	1,470,962	$	1,265,529	$	1,429,989

~~At March 31, 2013, the fair value of Cleco Power’s available-for-sale debt securities by contractual maturity was:~~33

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



CLECO HOLDINGS
CLECO POWER		2016 2ND QUARTER FORM 10-Q

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 the 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 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 2013 1ST QUARTER FORM 10-Q

Fair Value Measurements and Disclosures

~~The~~Cleco ~~authoritative~~classifies ~~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 MAR. 31, 2013		QUOTED PRICES INACTIVE MARKETSFOR IDENTICALASSETS(LEVEL 1)		SIGNIFICANTOTHEROBSERVABLEINPUTS(LEVEL 2)		SIGNIFICANTUNOBSERVABLEINPUTS(LEVEL 3)		AT DEC. 31, 2012		QUOTED PRICES INACTIVE MARKETSFOR IDENTICALASSETS(LEVEL 1)		SIGNIFICANTOTHEROBSERVABLEINPUTS(LEVEL 2)		SIGNIFICANTUNOBSERVABLEINPUTS(LEVEL 3)
	SUCCESSOR								PREDECESSOR
Asset Description
(THOUSANDS)	AT JUNE 30, 2016		QUOTED PRICES INACTIVE MARKETSFOR IDENTICALASSETS(LEVEL 1)		SIGNIFICANTOTHEROBSERVABLEINPUTS(LEVEL 2)		SIGNIFICANTUNOBSERVABLEINPUTS(LEVEL 3)		AT DEC. 31, 2015		QUOTED PRICES INACTIVE MARKETSFOR IDENTICALASSETS(LEVEL 1)		SIGNIFICANTOTHEROBSERVABLEINPUTS(LEVEL 2)		SIGNIFICANTUNOBSERVABLEINPUTS(LEVEL 3)
Institutional money market funds	$	49,963	$	—	$	49,963	$	—	$	39,489	$	—	$	39,489	$	—
Asset description
Municipal bonds	9,555		—		9,555		—		10,203		—		10,203		—
Institutional money market funds	$	180,973	$	—	$	180,973	$	—	$	89,584	$	—	$	89,584	$	—
Total assets	$	59,518	$	—	$	59,518	$	—	$	49,692	$	—	$	49,692	$	—
FTRs	13,989		—		—		13,989		7,673		—		—		7,673
Liability Description
Total assets	$	194,962	$	—	$	180,973	$	13,989	$	97,257	$	—	$	89,584	$	7,673
Interest rate derivatives	$	424	$	—	$	424	$	—	$	2,627	$	—	$	2,627	$	—
Liability description
Long-term debt	~~1,534,758~~$	2,853,296	—$	—	~~1,534,758~~$	2,853,296	—$	—	~~1,579,674~~$	1,463,989	—$	—	~~1,579,674~~$	1,463,989	—$	—
Total liabilities	$	1,535,182	$	—	$	1,535,182	$	—	$	1,582,301	$	—	$	1,582,301	$	—
FTRs	371		—		—		371		275		—		—		275
Total liabilities	$	2,853,667	$	—	$	2,853,296	$	371	$	1,464,264	$	—	$	1,463,989	$	275

Cleco Power
	CLECO POWER FAIR VALUE MEASUREMENTS AT REPORTING DATE USING:
(THOUSANDS)	AT ~~MAR.~~JUNE 3130, ~~2013~~2016		QUOTED PRICES INACTIVE MARKETSFOR IDENTICALASSETS(LEVEL 1)		SIGNIFICANTOTHEROBSERVABLEINPUTS(LEVEL 2)		SIGNIFICANTUNOBSERVABLEINPUTS(LEVEL 3)		AT DEC. 31, ~~2012~~2015		QUOTED PRICES INACTIVE MARKETSFOR IDENTICALASSETS(LEVEL 1)		SIGNIFICANTOTHEROBSERVABLEINPUTS(LEVEL 2)		SIGNIFICANTUNOBSERVABLEINPUTS(LEVEL 3)
Asset Description
Asset description
Institutional money market funds	$	47171,~~867~~752	$	—	$	47171,~~867~~752	$	—	$	3387,~~292~~363	$	—	$	3387,~~292~~363	$	—
Municipal bonds	9,555		—		9,555		—		10,203		—		10,203		—
FTRs	13,989		—		—		13,989		7,673		—		—		7,673
Total assets	$	57185,~~422~~741	$	—	$	57171,~~422~~752	$	—13,989	$	4395,~~495~~036	$	—	$	4387,~~495~~363	$	—7,673
Liability Description
Liability description
Interest rate derivatives	$	424	$	—	$	424	$	—	$	2,627	$	—	$	2,627	$	—
Long-term debt	$	1,470,962	$	—	$	1,470,962	$	—	$	1,429,989	$	—	$	1,429,989	$	—
Long-term debt	1,519,758		—		1,519,758		—		1,554,674		—		1,554,674		—
FTRs	371		—		—		371		275		—		—		275
Total liabilities	$	1,~~520~~471,~~182~~333	$	—	$	1,~~520~~470,~~182~~962	$	—371	$	1,~~557~~430,~~301~~264	$	—	$	1,~~557~~429,~~301~~989	$	—275

The ~~institutional~~following ~~money~~tables ~~market~~summarize ~~funds were reported on~~ the ~~Cleco~~net ~~Condensed~~changes ~~Consolidated Balance Sheet~~ in ~~cash~~the ~~and~~net ~~cash~~fair ~~equivalents,~~value ~~current~~of ~~restricted~~FTR ~~cash~~assets and ~~cash~~liabilities ~~equivalents,~~classified ~~non-current~~as ~~restricted~~Level ~~cash and cash equivalents, and restricted investments of $39.6 million, $~~3.3 ~~million,~~in ~~$5.8 million,~~the ~~and~~fair ~~$1.3~~value ~~million,~~hierarchy ~~respectively,~~for ~~at March 31, 2013. At~~ Cleco ~~Power, the institutional money market funds were reported on the Condensed Consolidated Balance Sheet in cash~~ and ~~cash~~Cleco equivalents, current restricted cash and cash equivalents, non-current restricted cash and cash equivalents, and restricted investments and were $37.6 million, $3.3 million, $5.7 million, and $1.3 million, respectively, at March 31, 2013. Power:

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



Cleco
	SUCCESSOR			PREDECESSOR						SUCCESSOR			PREDECESSOR
(THOUSANDS)	APR. 13, 2016 - JUNE 30, 2016			APR. 1, 2016 - APR. 12, 2016			FOR THE THREE MONTHS ENDED JUNE 30, 2015			APR. 13, 2016 - JUNE 30, 2016			JAN. 1, 2016 - APR. 12, 2016			FOR THE SIX MONTHS ENDED JUNE 30, 2015
Beginning balance	$	3,458		$	1,866		$	1,813		$	3,458		$	7,398		$	9,949
Unrealized gains (losses)*	1,234			(199		)	3,780			1,234			(1,031		)	2,070
Purchases	12,608			2,024			20,087			12,608			2,070			20,151
Settlements	(3,682		)	(233		)	(3,706		)	(3,682		)	(4,979		)	(10,196		)
Ending balance	$	13,618		$	3,458		$	21,974		$	13,618		$	3,458		$	21,974
* Unrealized gains and losses are reported through Accumulated deferred fuel on the balance sheet.

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 in the amount of $0.4 million at March 31, 2013.



Cleco Power
	FOR THE THREE MONTHS ENDED JUNE. 30,						FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2016			2015			2016			2015
Beginning balance	$	1,866		$	1,813		$	7,398		$	9,949
Unrealized gains*	1,035			3,780			203			2,070
Purchases	14,632			20,087			14,678			20,151
Settlements	(3,915		)	(3,706		)	(8,661		)	(10,196		)
Ending balance	$	13,618		$	21,974		$	13,618		$	21,974
* Unrealized gains and losses are reported through Accumulated deferred fuel on the balance sheet.

~~and~~CLECO ~~multiplies~~HOLDINGS ~~this~~CLECO ~~price~~POWER by2016 ~~the~~2ND ~~appropriate~~QUARTER ~~number~~FORM 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 risk10-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.Q

The following tables quantify the significant unobservable inputs used in developing the fair value of Level 3 positions as of June 30, 2016, and December 31, 2015 for Cleco and Cleco Power:



Cleco
	FAIR VALUE				VALUATION TECHNIQUE	SIGNIFICANT UNOBSERVABLE INPUTS	FORWARD PRICE RANGE
(THOUSANDS, EXCEPT FORWARD PRICE RANGE)	ASSETS		LIABILITIES				LOW			HIGH
SUCCESSOR
FTRs at June 30, 2016	$	13,989	$	371	RTO auction pricing	FTR price - per MWh	$	(2.25	)	$	6.95
PREDECESSOR
FTRs at Dec. 31, 2015	$	7,673	$	275	RTO auction pricing	FTR price - per MWh	$	(3.63	)	$	4.51



Cleco Power
	FAIR VALUE				VALUATION TECHNIQUE	SIGNIFICANT UNOBSERVABLE INPUTS	FORWARD PRICE RANGE
(THOUSANDS, EXCEPT FORWARD PRICE RANGE)	ASSETS		LIABILITIES				LOW			HIGH
FTRs at June 30, 2016	$	13,989	$	371	RTO auction pricing	FTR price - per MWh	$	(2.25	)	$	6.95
FTRs at Dec. 31, 2015	$	7,673	$	275	RTO auction pricing	FTR price - per MWh	$	(3.63	)	$	4.51

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 are determined by obtaining the closing price of similar assets and liabilities from published indices in active markets and then discounting the price to the current period using a U.S. Treasury published interest rate as a proxy for a risk-free rate of return. Cleco has consistently applied the Level 2 fair value technique from fiscal period to fiscal period. Level 3 fair values occur in situations in which there is little, if any, market activity for the asset or liability at the measurement date and therefore RTO auction prices are used. Significant increases or decreases in any of those inputs in isolation would result in a significantly different fair value measurement.

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~~At ~~Level~~June 30, 22016, Cleco and Cleco Power were exposed to concentrations of credit risk through their short-term investments classified as cash equivalents and restricted cash equivalents. The institutional money market funds ~~asset~~were ~~consists~~reported ofon athe ~~single~~Cleco ~~class. In~~Condensed ~~order~~Consolidated toBalance ~~capture~~Sheet ~~interest~~in ~~income~~cash and ~~minimize~~cash ~~risk~~equivalents, current restricted cash isand ~~invested~~cash inequivalents, and non-current restricted cash and cash equivalents of $12.7 million, $144.2 million, and $24.1 million, respectively, at June 30, 2016. At Cleco Power, the institutional money market funds ~~that~~were ~~invest~~reported ~~primarily~~on the Condensed Consolidated Balance Sheet in ~~short~~cash and cash equivalents, current restricted cash and cash equivalents, and non-~~term~~current ~~securities~~restricted ~~issued~~cash byand ~~the~~cash Uequivalents of $3.S5 million, $144.2 ~~Treasury~~million, inand ~~order~~$24.1 million, torespectively, ~~maintain~~at ~~liquidity~~June 30, ~~and~~2016. ~~achieve~~If the ~~goal~~money ofmarket afunds ~~net~~failed ~~asset~~to ~~value~~perform ofunder athe ~~dollar. The~~terms ~~risks~~of ~~associated~~the ~~with~~investments, ~~this~~Cleco ~~class~~and Cleco Power

26would be exposed to a loss of the invested amounts. Collateral on these types of investments is not required by Cleco or Cleco Power. 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 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.

~~CLECO~~Cleco ~~CORPORATION~~Power’s ~~CLECO~~FTRs ~~POWER~~were ~~2013~~priced ~~1ST~~using ~~QUARTER~~MISO’s ~~FORM~~monthly 10auction prices. Forward seasonal periods are not included in every monthly auction; therefore, the average of the most recent seasonal auction prices are used for monthly valuation. FTRs are categorized as Level 3 fair value measurements because the only relevant pricing available comes from MISO auctions, which occur monthly in the Multi-QPeriod Monthly Auction.

~~are~~The ~~counterparty~~Level ~~risk~~2 long-term debt liability consists of ~~the~~a single class. In order to fund ~~manager~~capital requirements, Cleco issues fixed and ~~risk~~variable rate long-term debt with various tenors. The fair value of ~~price~~this ~~volatility~~class ~~associated~~fluctuates as the market interest rates for fixed and variable rate debt with similar tenors and credit ratings change. The fair value of the ~~underlying~~debt ~~securities~~could also change from period to period due to changes in the credit rating of the ~~fund~~Cleco entity by which the debt was issued.

~~The~~During ~~Level 2 municipal bonds consisted of a single class. In order to maximize income and to meet~~ the ~~requirements~~six ~~established~~months byended ~~the LPSC for the restricted reserve fund~~June 30, ~~restricted cash and cash equivalents were invested in short-term~~2016, ~~fixed-income debt instruments in order to maintain safety~~ and ~~liquidity. The risks associated with this class are counterparty risk of~~ the ~~fund~~year ~~manager~~ended ~~and~~December 31, ~~risk of price volatility associated with the municipal bonds. Quarterly~~2015, Cleco ~~receives~~did ~~reports~~not ~~from~~experience ~~the~~any ~~trustee~~transfers ~~for~~between ~~the~~levels ~~investment~~within ~~manager which provides~~ the fair value ~~measurement~~hierarchy. ~~Cleco performs an evaluation of those reports to verify the fair value of the securities.~~

~~The~~Commodity 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.Contracts

The ~~Level~~following 2tables ~~long-term~~present ~~debt~~the ~~liability~~fair ~~consists~~values of aderivative ~~single~~instruments ~~class. In~~and ~~order~~their torespective ~~fund~~line ~~capital~~items ~~requirements, Cleco issues long-term, fixed rate debt with various tenors. The fair value of this class fluctuates~~ as ~~the~~recorded ~~market~~on ~~interest~~Cleco ~~rates for fixed rate debt with similar tenors~~ and ~~credit~~Cleco ~~ratings~~Power’s ~~change. The~~Condensed ~~fair~~Consolidated ~~value~~Balance ofSheets ~~the~~at ~~debt~~June 30, ~~could~~2016, ~~also~~and ~~change~~December ~~from~~31, ~~period to period due to changes in the credit rating of the Cleco entity that issued the debt.~~2015:

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 three months ended March 31, 2013, and the year ended December 31, 2012, Cleco did not experience any transfers between levels.35

~~Derivatives~~CLECO ~~and~~HOLDINGS ~~Hedging~~CLECO POWER 2016 2ND QUARTER FORM 10-Q

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.



Cleco
	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
		SUCCESSOR		PREDECESSOR
(THOUSANDS)	BALANCE SHEET LINE ITEM	AT JUNE 30, 2016		AT DEC. 31, 2015
Commodity-related contracts
FTRs
Current	Energy risk management assets	$	13,989	$	7,673
Current	Energy risk management liabilities	371		275
Commodity-related contracts, net		$	13,618	$	7,398

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. At December 31, 2012, Cleco and Cleco Power’s Condensed Consolidated Balance Sheets had no derivative instruments not designated as hedging instruments.



Cleco Power
	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
(THOUSANDS)	BALANCE SHEET LINE ITEM	AT JUNE 30, 2016		AT DEC. 31, 2015
Commodity-related contracts
FTRs
Current	Energy risk management assets	$	13,989	$	7,673
Current	Energy risk management liabilities	371		275
Commodity-related contracts, net		$	13,618	$	7,398

~~For~~The ~~the~~following ~~three~~tables ~~months~~present ~~ended~~the ~~March 31,~~effect ~~2013,~~of ~~there~~derivatives ~~was~~not nodesignated ~~effect~~as hedging instruments on Cleco and Cleco Power’s Condensed Consolidated Statements of Income for ~~derivatives not designated as hedging instruments. For~~ the three and six months ended ~~March~~June 30, 312016, and 2015:

2012, Cleco and Cleco Power recognized a loss of $3.5 million on derivatives not designated as hedging instruments. In accordance with the authoritative guidance for regulated operations, there were no unrealized gains or losses and no deferred losses associated with fuel cost hedges reported in Accumulated deferred fuel on the balance sheet as of March 31, 2013 and December 31, 2012. As gains and losses are realized in future periods, they will be recorded as Fuel used for electric generation on the income statement.



Cleco
		AMOUNT OF GAIN/(LOSS) RECOGNIZED IN INCOME ON DERIVATIVES
		SUCCESSOR			PREDECESSOR						SUCCESSOR			PREDECESSOR
(THOUSANDS)	DERIVATIVES LINE ITEM	APR. 13, 2016 - JUNE 30, 2016			APR. 1, 2016 - APR. 12, 2016			FOR THE THREE MONTHS ENDED JUNE 30, 2015			APR. 13, 2016 - JUNE 30, 2016			JAN. 1, 2016 - APR. 12, 2016			FOR THE SIX MONTHS ENDED JUNE 30, 2015
Commodity contracts
FTRs⁽¹⁾	Electric operations	$	6,879		$	43		$	18,098		$	6,879		$	8,563		$	33,606
FTRs⁽¹⁾	Power purchased for utility customers	(303		)	(38		)	(8,613		)	(303		)	(5,761		)	(16,650		)
Total		$	6,576		$	5		$	9,485		$	6,576		$	2,802		$	16,956

At(1)For ~~March 31~~the periods April 1, ~~2013~~2016 - April 12, 2016, January 1, 2016 - April 12, 2016, and ~~December 31~~April 13, ~~2012~~2016 - June 30, ~~Cleco~~2016, ~~Power~~unrealized ~~had~~(losses) nogains ~~open~~associated ~~positions~~with ~~hedged~~FTRs ~~for~~of ~~natural~~($0.2 ~~gas~~million), ($1.0 million), and $1.2 million, respectively, were reported through Accumulated deferred fuel ~~costs~~on the balance sheet. For the three and six months ended June 30, 2015, unrealized gains associated with FTRs of $3.8 million and $2.1 million, respectively, were reported through Accumulated deferred fuel on the balance sheet.

The following table presents the effect of derivatives 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.



Cleco Power
		FOR THE THREE MONTHS ENDED JUNE 30,						FOR THE SIX MONTHS ENDED JUNE 30,
		2016			2015			2016			2015
(THOUSANDS)	DERIVATIVES LINE ITEM	AMOUNT OF GAIN/(LOSS) RECOGNIZED IN INCOME ON DERIVATIVES
Commodity contracts
FTRs⁽¹⁾	Electric operations	$	6,922		$	18,098		$	15,442		$	33,606
FTRs⁽¹⁾	Power purchased for utility customers	(341		)	(8,613		)	(6,064		)	(16,650		)
Total		$	6,581		$	9,485		$	9,378		$	16,956

	FOR THE THREE MONTHS ENDED MAR. 31,
	2013					2012
(THOUSANDS)	AMOUNTOF GAINRECOGNIZEDIN OCI		AMOUNT OF LOSSRECLASSIFIED FROMACCUMULATED OCIINTO INCOME(EFFECTIVE PORTION)			AMOUNTOF GAINRECOGNIZEDIN OCI		AMOUNT OF GAINRECLASSIFIED FROMACCUMULATED OCIINTO INCOME(EFFECTIVE PORTION)
Interest rate derivatives (1)	$	1,762	$	(20	)*	$	4,657	$	1	*

⁽¹⁾For the three and six months ended June 30, 2016, unrealized gains associated with FTRs of $1.0 million and $0.2 million, respectively, were reported through Accumulated deferred fuel on the balance sheet. For the three and six months ended June 30, 2015, unrealized gains associated with FTRs of $3.8 million and $2.1 million, respectively, were reported through Accumulated deferred fuel on the balance sheet

*At ~~The~~June 30, ~~gain~~2016, ~~(loss)~~and ~~reclassified~~December 31, ~~from~~2015, ~~accumulated~~Cleco ~~OCI~~Power ~~into~~had ~~income~~no ~~(effective~~open ~~portion)~~positions hedged for natural gas. In June 2015, the LPSC approved a long-term natural gas hedging pilot program that requires Cleco Power to establish a proposal for a program that will be designed to provide gas price stability for a minimum of five years. This proposal is ~~reflected~~required into ~~interest~~be ~~charges~~submitted to the LPSC by June 30, 2018.

~~(1)~~Cleco ~~During~~Power purchases the ~~three~~majority ~~months~~of ~~ended~~its ~~March 31,~~FTRs ~~2013~~in ~~and~~annual ~~2012,~~auctions ~~Cleco~~facilitated ~~recorded~~by ~~$0.4~~MISO ~~million~~during the second quarter of each year and $2may also purchase additional FTRs in monthly auctions facilitated by MISO.6 ~~million~~FTRs are derivative instruments which represent economic hedges of ~~ineffectiveness~~future ~~related~~congestion charges that will be incurred in serving Cleco Power’s customer load. FTRs represent rights to ~~the~~congestion ~~interest~~credits ~~rate~~or ~~derivatives~~charges asalong a ~~regulatory~~path ~~asset,~~during ~~respectively~~a given time frame for a certain MW quantity. FTRs are not designated as hedging instruments

Atfor ~~March 31,~~accounting ~~2013, Cleco Power expected $0~~purposes.3 ~~million~~The oftotal ~~the~~volume ~~effective portion~~ of ~~deferred~~FTRs ~~net~~that ~~losses~~Cleco ~~related~~Power tohad ~~interest~~outstanding ~~rate~~at ~~derivatives~~June 30, to2016, beand ~~reclassed~~December 31, ~~from~~2015, ~~accumulated~~was ~~OCI~~18.3 tomillion ~~interest~~MWh ~~charges~~and ~~over~~8.4 ~~the~~million ~~next~~MWh, ~~12 months~~respectively.

Note 56 — Debt

Short-term Debt

At ~~March~~June 3130, ~~2013~~2016, and December 31, ~~2012~~2015, Cleco and Cleco Power had no short-term debt outstanding.

Long-term Debt

At ~~March~~June 3130, ~~2013~~2016, Cleco’s long-term debt outstanding was $12.3378 billion, of which $1620.60 million was due within one year. The long-term debt due within one year at ~~March~~June 3130, ~~2013~~2016, represents $1417.43 million of principal payments for the Cleco ~~Katrina/Rita storm recovery bonds and $2.2 million of capital lease payments.~~

For Cleco, long-term debt decreased $17.5 million from December 31, 2012, primarily due to $60.0 million of solid waste disposal bonds reacquired in March 2013, a $10.0 million reduction in Cleco Corporation’s credit facility draws, 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. 36

AtCLECO ~~March 31,~~HOLDINGS ~~2013,~~CLECO ~~Cleco~~POWER ~~Power’s~~2016 ~~long-term~~2ND ~~debt~~QUARTER ~~outstanding~~FORM ~~was $1.32 billion of which $16.6 million was due within one year. The long~~10-~~term debt due within one year at March 31, 2013, represents $14.4 million principal payments for the Cleco Katrina/Rita storm recovery bonds and $2.2 million of capital lease payments.~~ Q

~~For~~Katrina/Rita ~~Cleco~~storm ~~Power,~~recovery ~~long-term~~bonds ~~debt~~and ~~decreased~~ $72.57 million ~~primarily due to $60.0 million~~ of ~~solid~~capital ~~waste~~lease ~~disposal bonds~~ payments.

27In connection with the completion of the Merger, on April 13, 2016, Cleco Holdings entered into a $1.35 billion Acquisition Loan Facility. The Acquisition Loan Facility had a three-year term and a rate of LIBOR plus 1.75% or ABR plus 0.75%. In May and June 2016, Cleco Holdings refinanced the Acquisition Loan Facility with a series of other long-term financing described below.

~~CLECO~~On ~~CORPORATION~~May ~~CLECO~~17, ~~POWER~~2016, ~~2013~~Cleco ~~1ST~~Holdings ~~QUARTER~~completed ~~FORM~~the ~~10-Q~~public sale of $535.0 million of 3.743% senior notes due May 1, 2026, and $350.0 million of 4.973% senior notes due May 1, 2046. On May 24, 2016, Cleco Holdings completed the private sale of $165.0 million of 3.250% senior notes due May 1, 2023. On June 28, 2016, Cleco Holdings entered into a $300.0 million variable rate bank term loan due June 28, 2021. Amounts outstanding under the bank term loan bear interest, at Cleco’s option, at a base rate plus 0.625% or an adjusted LIBOR rate plus 1.625%. The interest rate on the bank term loan was 4.125% at June 30, 2016. On July 1, 2016, the bank term loan was converted to a LIBOR based rate of 2.095%. The proceeds from the issuance and sale of these notes and term loan were used to repay the $1.35 billion Acquisition Loan Facility, as well as fees and expenses related to the offering. Debt issuance costs of $17.7 million were recorded in connection with the repayment of the Acquisition Loan Facility.

~~reacquired~~At inJune 30, ~~March~~2016, ~~2013~~Cleco Power’s long-term debt outstanding was $1.24 billion, aof which $20.0 million was due within one year. The long-term debt due within one year at June 30, 2016, represents $17.3 million of principal payments for the Cleco Katrina/Rita storm recovery bonds and $2.7 million of capital lease payments.1 For Cleco Power, long-term debt decreased $9.2 million from December 31, 2015, primarily due to an $8.5 million scheduled Cleco Katrina/Rita storm recovery bond principal payment made in March ~~2013,~~2016 and a $01.53 million decrease in capital lease obligations. These decreases were partially offset by a $~~60.~~0.4 million ~~bank~~of ~~term~~debt ~~loan~~issuance ~~entered~~cost ~~into~~amortizations inand ~~March~~$0.2 ~~2013~~million ~~and~~of 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

AtOn ~~March 31~~April 13, ~~2013~~2016, ~~Cleco~~in ~~Corporation~~connection ~~had~~with ~~$15.0~~the ~~million~~completion ~~borrowings~~of ~~outstanding~~the ~~under~~Merger, Cleco Holdings replaced its existing $250.0 million credit facility atwith ana ~~interest~~$100.0 ~~rate~~million ofcredit 1facility.~~71%. The~~ ~~borrowings~~At ~~under~~the time of the credit facility ~~are~~replacement, ~~considered~~the to$27.0 bemillion ~~long-term~~draw ~~because~~that ~~the~~was ~~credit~~outstanding ~~facility~~was ~~expires in 2016~~repaid. The ~~borrowing~~new ~~costs~~credit ~~under~~facility has similar terms as the previous facility, ~~are~~including ~~equal~~restricted tofinancial ~~one-month~~covenants, ~~LIBOR~~and ~~plus~~expires 1in 2021.~~50%~~ orAt ~~ABR~~June 30, ~~plus~~2016, ~~facility~~Cleco ~~fees~~Holdings ofwas ~~0.25%. The~~in ~~existing~~compliance ~~borrowings~~with ~~had~~the ~~30-day~~covenants ~~terms. The~~of ~~$15~~its credit facility.0 ~~million~~The ~~draw~~borrowing ~~matured~~costs ~~and~~under ~~was~~Cleco ~~renewed~~Holdings’ onnew ~~April 29,~~credit ~~2013.~~

facility are equal to LIBOR plus 1.75% or ABR plus 0.75%, plus commitment fees of 0.275%. At ~~March~~June 3130, ~~2013~~2016, Cleco ~~Power~~Holdings had no borrowings outstanding under its ~~existing~~$100.0 million credit facility.

~~Note~~On 6April —13, ~~Pension~~2016, ~~Plan~~in connection with the completion of the Merger, Cleco Power replaced its existing $300.0 million credit facility with a new $300.0 million credit facility. The new credit facility has similar terms as the previous facility, including restricted financial covenants, and ~~Employee~~expires ~~Benefits~~in 2021. At June 30, 2016, Cleco Power was in compliance with the covenants of its credit facility. The borrowing costs under Cleco Power’s new credit facility are equal to LIBOR plus 1.125% or ABR plus 0.125%, plus commitment fees of 0.125%. At June 30, 2016, Cleco Power had no borrowings outstanding under its $300.0 million credit facility. The $2.0 million letter of credit issued to MISO is covered under a standing letter of credit outside of Cleco Power’s credit facility; therefore, it does not reduce the borrowing capacity of Cleco Power’s new credit facility.

Note 7 — Pension Plan and Employee Benefits

Pension Plan and Other Benefits Plan

~~Most~~Employees ~~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 10ten 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. Cleco did not make any required or discretionary contributions to the pension plan in 2015 and does not expect to make any in 2016. 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~~Cleco’s ~~full~~retirees ~~funding~~and ~~limitation. In~~their ~~January~~dependents ~~2013,~~may ~~Cleco~~be ~~Power~~eligible ~~made $34.0 million in discretionary contributions~~ to ~~the~~receive ~~pension~~medical, ~~plan. Cleco~~dental, ~~does~~vision, ~~not~~and ~~expect~~life toinsurance ~~make~~benefits ~~any~~(other ~~additional discretionary contributions to the pension plan for the remainder of the year~~benefits). ~~During~~ ~~2012,~~ Cleco ~~made~~recognizes ~~no discretionary or required contributions to~~ the ~~pension~~expected ~~plan. The~~cost ~~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~~these ~~contributions~~other ~~may~~benefits beduring ~~affected by changes in~~ the ~~discount~~periods ~~rate, changes~~ in ~~the~~which ~~funding regulations, and actual returns on fund assets. Cleco Power is considered~~ the ~~plan~~benefits ~~sponsor~~are ~~and Support Group is considered the plan administrator~~earned.

~~Cleco’s~~The ~~retirees~~components ~~and~~of ~~their~~net ~~dependents~~periodic ~~are~~pension ~~eligible to receive medical, dental, vision,~~ and ~~life insurance benefits (~~other ~~benefits). Cleco~~benefit ~~recognizes the expected~~ cost offor ~~these~~the ~~other~~three ~~benefits~~and ~~during~~six ~~the~~months ~~periods~~ended inJune 30, ~~which~~2016, ~~the~~and ~~benefits~~2015 are ~~earned.~~as follows:

The components of net periodic pension and other benefit cost for the three months ended March 31, 2013 and 2012, are as follows:



	PENSION BENEFITS									OTHER BENEFITS
	SUCCESSOR			PREDECESSOR						SUCCESSOR		PREDECESSOR
(THOUSANDS)	APR. 13, 2016 - JUNE 30, 2016			APR. 1, 2016 - APR. 12, 2016			FOR THE THREE MONTHS ENDED JUNE 30, 2015			APR. 13, 2016 - JUNE 30, 2016		APR. 1, 2016 - APR. 12, 2016		FOR THE THREE MONTHS ENDED JUNE 30, 2015
Components of periodic benefit costs
Service cost	$	1,893		$	301		$	2,683		$	329	$	51	$	392
Interest cost	4,669			734			5,271			364		56		372
Expected return on plan assets	(5,193		)	(801		)	(5,856		)	—		—		—
Amortizations
Prior period service (credit) cost	(15		)	(2		)	(18		)	—		4		34
Net loss	1,845			329			3,568			—		21		238
Net periodic benefit cost	$	3,199		$	561		$	5,648		$	693	$	132	$	1,036

	PENSION BENEFITS						OTHER BENEFITS
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2013			2012			2013		2012
Components of periodic benefit cost:
Service cost	$	2,484		$	2,149		$	314	$	397
Interest cost	4,437			4,430			481		476
Expected return on plan assets	(5,764		)	(5,194		)	—		—
Amortizations:
Transition obligation	—			—			4		5
Prior period service cost	(18		)	(18		)	—		—
Net loss	3,373			1,783			318		200
Net periodic benefit cost	$	4,512		$	3,150		$	1,117	$	1,078

~~Because~~CLECO ~~Cleco~~HOLDINGS ~~Power~~CLECO isPOWER ~~the~~2016 ~~pension~~2ND ~~plan~~QUARTER ~~sponsor~~FORM 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.10-Q

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 March 31, 2013. The amount at December 31, 2012, was also $3.1 million. The current portion of the other benefits liability for Cleco Power was $2.9 million at March 31, 2013. The amount at December 31, 2012, was also $2.9 million. The expense related to other benefits reflected in Cleco Power’s Condensed Consolidated Statements of Income for the three months ended March 31, 2013 and 2012, was $1.0 million and $0.9 million, respectively.



	PENSION BENEFITS									OTHER BENEFITS
	SUCCESSOR			PREDECESSOR						SUCCESSOR		PREDECESSOR
(THOUSANDS)	APR. 13, 2016 - JUNE 30, 2016			JAN. 1, 2016 - APR. 12, 2016			FOR THE SIX MONTHS ENDED JUNE 30, 2015			APR. 13, 2016 - JUNE 30, 2016		JAN. 1, 2016 - APR. 12, 2016		FOR THE SIX MONTHS ENDED JUNE 30, 2015
Components of periodic benefit costs
Service cost	$	1,893		$	2,563		$	5,209		$	329	$	431	$	784
Interest cost	4,669			6,242			10,398			364		476		744
Expected return on plan assets	(5,193		)	(6,812		)	(11,690		)	—		—		—
Amortizations
Prior period service (credit) cost	(15		)	(20		)	(36		)	—		34		68
Net loss	1,845			2,798			6,914			—		181		476
Net periodic benefit cost	$	3,199		$	4,771		$	10,795		$	693	$	1,122	$	2,072

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 predecessor periods April 1, 2016, through April 12, 2016, and January 1, 2016, through April 12, 2016, was $0.1 million and $0.5 million, respectively. The expense of the pension plan related to Cleco’s other subsidiaries for the successor period April 13, 2016, through June 30, 2016, was $0.4 million. The amounts for the predecessor periods for the three and six months ended June 30, 2015, were $0.6 million and $1.0 million, respectively.

Cleco Holdings 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 expense related to other benefits reflected in Cleco Power’s Condensed Consolidated Statements of Income for the three and six months ended June 30, 2016, was $0.8 million and $1.7 million, respectively. The amounts for the same periods in 2015 were $0.9 million and $1.8 million, respectively. The current and non-current portions of the other benefits liability for Cleco and Cleco Power at June 30, 2016, and December 31, 2015, are as follows:



Cleco
	SUCCESSOR		PREDECESSOR
(THOUSANDS)	AT JUNE 30, 2016		AT DEC. 31, 2015
Current	$	3,613	$	3,613
Non-current	$	38,651	$	39,457



Cleco Power
(THOUSANDS)	AT JUNE 30, 2016		AT DEC. 31, 2015
Current	$	3,140	$	3,140
Non-current	$	33,589	$	34,300

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 (a) the highest base salary paid out ofover the last five calendar years ~~plus~~and (b) the average of the three highest cash bonuses paid during the 60 months prior to retirement. SERP benefits are reduced by retirement benefits received from any other defined benefit pension plan, supplemental executive retirement plan, or Cleco contributions under the enhanced 401(k) Plan to the extent such contributions exceed the limits of the 401(k) Plan. In connection with the completion of the Merger, one executive officer’s SERP benefits will be capped as of January 1, 2018,

28with regard to salary; however, adjustments will continue with regard to age and tenure with Cleco. In 2014, SERP was closed to new participants; however, with regard to current SERP participants, including former employees or their beneficiaries, all terms of SERP will continue, other than as described above. In accordance with the SERP plan document and the Merger Agreement, four executive officers received enhanced benefits, and upon termination of employment, two of these executive officers received accelerated vesting. Management will review current market trends as it evaluates Cleco’s future compensation strategy. 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 SERP participants. Market conditions could have a significant impact on the cash surrender value of the life insurance policies. Proceeds from the life insurance policies are expected to be used to pay the SERP participants’ death 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 that employed the officer. Cleco Power is considered the plan sponsor and Support Group is considered the plan administrator.

~~CLECO~~The ~~CORPORATION~~components ~~CLECO~~of ~~POWER~~net ~~2013~~periodic ~~1ST~~benefit ~~QUARTER~~cost ~~FORM~~related ~~10-Q~~to SERP for the three and six months ended June 30, 2016, and 2015 are as follows:

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.



	SUCCESSOR		PREDECESSOR
(THOUSANDS)	APR. 13, 2016 - JUNE 30, 2016		APR. 1, 2016 - APR. 12, 2016			FOR THE THREE MONTHS ENDED JUNE 30, 2015
Components of periodic benefit costs
Service cost	$	589	$	119		$	728
Interest cost	755		169			744
Amortizations
Prior period service cost	—		3			13
Net (gain) loss	—		(81		)	782
Net periodic benefit cost	1,344		210			2,267
Curtailments	—		3,602			—
Special/contractual termination benefits	—		3,222			—
Total benefit cost	$	1,344	$	7,034		$	2,267

	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~~CLECO ~~SERP~~HOLDINGS ~~liabilities~~CLECO ~~are~~POWER ~~reported~~2016 on2ND ~~the~~QUARTER ~~individual~~FORM 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. 10-Q



	SUCCESSOR		PREDECESSOR
(THOUSANDS)	APR. 13, 2016 - JUNE 30, 2016		JAN. 1, 2016 - APR. 12, 2016		FOR THE SIX MONTHS ENDED JUNE 30, 2015
Components of periodic benefit costs
Service cost	$	589	$	702	$	1,353
Interest cost	755

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