Generally constructive regulatory environment allows for reasonable ROE of 11.25% through base rates, full and timely pass-through of fuel costs, and rate certainty through the construction phase of the 600 MW Rodemacher Unit 3 plant. Regulated utility operations provide the bulk of cash flow, with moderate operational risk and a favorable cost structure. Lack of competitive pressures in the service territory. Service territory has average to below-average demographic characteristics. Owned generation cannot currently support peak power requirements, necessitating short-term power purchases. Financial profile expected to weaken materially until the Rodemacher Unit 3 is placed into rate base. The ratings on diversified energy company Cleco Corp. reflect the company's strong business risk profile and expectations of an aggressive financial risk profile.
