The 'BBB' ratings on Cleco Corp. and subsidiary Cleco Power LLC reflect a slow-growing, although stable electric utility, residual issues from unsuccessful merchant power ventures, an average regulatory environment at the utility, and utility operations that are hampered by a low proportion of owned generation. In addition, Cleco is burdened by significant debt incurred to fund construction of unregulated power generation capacity. The company pursued a growth strategy in the late 1990s based on merchant power generation and marketing. Through its unregulated subsidiary, Cleco Midstream Resources LLC, the company built three gas-fired merchant plants and currently has tolling agreements with entities related to The Williams Cos. Inc. and Calpine Corp. tied to two of these three plants. The drop in
