• Second quarter revenues up due to growth in wholesale business

• Achieves four-year extension on Formula Rate Plan (FRP)

  • Reduces retail Return on Equity (ROE) to 10 percent compared to recently earned retail ROE of an estimated 11.1 percent

  • Provides a one-time refund and ongoing rate reduction for retail customers

  • Provides clarity in direct allocation of assets related to long-term wholesale contracts

  • Refund reduces second quarter earnings by $0.22 per diluted share

• Confirms 2014 operational earnings guidance of $2.65 to $2.75 per diluted share and discusses impact of recent FRP outcome on future year results

PINEVILLE, La. - Cleco Corporation (NYSE: CNL) posted 2014 second quarter earnings of $36.6 million, or $0.60 per diluted share, down from $42.0 million, or $0.69 per diluted share recorded in the second quarter of 2013. Operational earnings of $34.8 million, or $0.57 per diluted share in the 2014 second quarter, were down from $37.7 million, or $0.62 per diluted share recorded in the second quarter of 2013. The lower year-over-year results reflect a $0.22 per share charge in the 2014 second quarter related to the one-time $22.3 million customer refund established with the company's recently approved FRP extension. Excluding the refund, operational earnings would have been $0.79 per diluted share.

"During the second quarter, growth in our wholesale business drove higher revenues," said Bruce Williamson, chairman, president and CEO of Cleco Corporation. "With that said, our earnings this quarter contain the full effect of the one-time refund to customers as we transition from our former rate plan to our recently approved FRP extension. Excluding this one-time adjustment to earnings, we produced a strong quarter in line with current year expectations.

"Overall, we view the outcome of Cleco Power's rate plan extension as a balanced result for shareholders and customers, providing a clear path for the rate treatment of our wholesale business while significantly reducing rates for our retail customers," said Williamson.

Earnings Outlook
Cleco today confirmed its 2014 consolidated operational earnings guidance range of $2.65 to $2.75 per diluted share. Factors that could impact the 2014 earnings guidance range include tax negotiations regarding historical tax items and summer weather. The 2014 earnings guidance is based on normal weather for the year, is generally consistent with the previous rate plan, and excludes adjustments related to life insurance policies and the Acadia indemnifications. The effective tax rate assumed in the 2014 guidance is approximately 34 percent.

Cleco plans to issue 2015 consolidated operational earnings guidance and disclose capital expenditures in the fourth quarter of 2014. The company noted that effective July 1, 2014, its retail target ROE was reduced from 10.7 percent to 10 percent. When compared to the recently earned retail ROE of an estimated 11.1 percent, the new rate plan will likely reduce Cleco Power's annual earnings potential by up to $0.25 per share based on the retail jurisdictional rate base. The company also noted that, compared to 2014, it does not currently expect its overall rate base to be materially different in 2015.

1 Refer to "Operational Earnings Adjustments" in this news release

Quarter-Over-Quarter Operational Diluted Earnings Per Share Reconciliation:

1. Refer to "Operational Earnings Adjustments" in this news release

Cleco Power

• Non-fuel revenue increased earnings by $0.24 per share compared to the second quarter of 2013 primarily due to $0.18 per share from higher sales to a new wholesale customer and the absence of customer refunds for construction financing costs related to Madison Unit 3.  Also contributing to this increase was $0.06 per share from adjustments to Cleco Power's formula rate plan.

• Rate refund accrual decreased earnings by $0.22 per share compared to the second quarter of 2013 primarily due to provisions for estimated accruals as a result of the formula rate plan extension approved in June 2014.

• Other expenses, net, decreased earnings by $0.08 per share compared to the second quarter of 2013 primarily due to $0.04 per share of higher depreciation and amortization expense, $0.03 of higher maintenance expense largely related to the transfer of Coughlin to Cleco Power, and $0.02 per share of higher taxes other than income taxes, partially offset by $0.01 per share for other miscellaneous expenses.

• AFUDC increased earnings by $0.03 per share compared to the second quarter of 2013 primarily due to accruals related to the Mercury and Air Toxics Standards (MATS) project and miscellaneous transmission projects.

• Income taxes decreased earnings by $0.01 per share compared to the second quarter of 2013 primarily due to the adjustment to record tax expense at the projected annual effective tax rate.

Corporate and Other

• Corporate's results decreased earnings by $0.02 per share compared to the second quarter of 2013 primarily due to higher income taxes.

• Midstream's results increased earnings by $0.01 per share compared to the second quarter of 2013 primarily due to $0.04 per share of lower taxes resulting from settlements with taxing authorities, partially offset by $0.03 per share of lower net tolling revenue and expenses, which was the result of the transfer of Coughlin to Cleco Power.

For a discussion of other transactions affecting Corporate and Other results, please refer to "Operational Earnings Adjustments" below.

Year-Over-Year Operational Diluted Earnings Per Share Reconciliation:

1. Refer to "Operational Earnings Adjustments" in this news release

Cleco Power

• Non-fuel revenue increased earnings by $0.46 per share compared to the first six months of 2013 primarily due to $0.30 per share from higher sales to a new wholesale customer, colder winter weather in the first quarter of 2014, and the absence of customer refunds for construction financing costs related to Madison Unit 3.  Also contributing to this increase was $0.13 per share from adjustments to Cleco Power's formula rate plan, $0.02 per share of higher transmission revenue, and $0.01 per share of higher other miscellaneous revenue.

• Rate refund accrual decreased earnings by $0.22 per share compared to the first six months of 2013 primarily due to provisions for estimated accruals as a result of the formula rate plan extension approved in June 2014.

• Other expenses, net, decreased earnings by $0.33 per share compared to the first six months of 2013 primarily due to $0.18 of higher maintenance expense largely related to generating station outage expenses and the transfer of Coughlin to Cleco Power, $0.12 per share of higher depreciation and amortization expense, and $0.03 per share of higher taxes other than income taxes.

• Interest charges increased earnings by $0.01 per share compared to the first six months of 2013 primarily due to $0.01 per share related to the retirement of senior notes, $0.01 per share related to an adjustment to customer surcredits due to a tax settlement, and $0.01 per share of other miscellaneous interest charges, partially offset by $0.01 related to GO Zone bonds and $0.01 related to uncertain tax positions.

• AFUDC increased earnings by $0.04 per share compared to the first six months of 2013 primarily due to accruals related to the MATS project and miscellaneous transmission projects.

• Income taxes decreased earnings by $0.02 per share compared to the first six months of 2013 primarily due to $0.01 per share for permanent tax deductions and $0.01 per share for the adjustment to record tax expense at the projected annual effective tax rate.

Corporate and Other

• Corporate's results decreased earnings by $0.02 per share compared to the first six months of 2013 as a result of $0.03 per share primarily due to higher income taxes, partially offset by $0.01 per share related to other miscellaneous items.

• Midstream's results increased earnings by $0.02 per share compared to the first six months of 2013 primarily due to $0.04 per share of lower taxes resulting from settlements with taxing authorities, partially offset by $0.02 per share of lower net tolling revenue and expenses, which was the result of the transfer of Coughlin to Cleco Power.

For a discussion of other transactions affecting Corporate and Other results, please refer to "Operational Earnings Adjustments" below.

Operational Earnings Adjustments:

Cleco's management uses operational diluted earnings per share, which is a non-GAAP measure, to evaluate the operations of Cleco and establish goals for management and employees.  Management believes this presentation is appropriate and enables investors to more accurately compare Cleco's operational financial performance over the periods presented.  Operational earnings and operational diluted earnings as presented here may not be comparable to similarly titled measures used by other companies.  Operational earnings and operational diluted earnings per share should not be considered alternatives to, or more meaningful than, net income, cash flows from operating activities, or any other measure presented in accordance with GAAP.  The following table provides a reconciliation of operational diluted earnings per share to reported GAAP diluted earnings per share.

Reconciliation of Operational Diluted Earnings Per Share to Reported GAAP Diluted Earnings Per Share

Reconciling adjustments from operational diluted earnings per share to GAAP diluted earnings per share are as follows:

Life Insurance Policies

Cleco has life insurance policies covering certain members of management.  These policies have a cash surrender value component that is carried as an asset and adjusted due to market changes, premium payments, or policy redemptions.  Cleco is unable to predict market changes and cash surrender value amounts of these policies, and management does not consider these adjustments to be a component of operational earnings.

Tax Levelization

GAAP requires companies to apply an effective tax rate to interim periods that is consistent with the company's estimated annual effective tax rate.  As a result, on a quarterly basis, Cleco projects the annual effective tax rate and then adjusts the tax expense recorded in that quarter to reflect the projected annual effective tax rate.  During the second quarter of 2014, Cleco recorded a $0.01 per share benefit from the levelization of its annual tax rate to bring the actual tax rate in line with the projected annual effective tax rate.  The resulting adjustment for this item had no impact for the second quarter of 2013.  The incremental adjustment for tax levelization is not related to the current quarter's operational earnings because it reflects the effect of the change in tax rates on operational earnings for the prior quarter.

Acadia Unit 2 Indemnifications

Acadia Power Partners, LLC provided limited guarantees and indemnifications to Entergy Louisiana when it acquired Acadia Unit 2 in April 2011.  Acadia Power Partners, LLC and Acadia Power Holdings reduced the indemnification liability either through expiration of the contractual life or through changes in the probability of a claim arising.  During the second quarters of 2014 and 2013, the contractual expiration of the underlying indemnifications increased earnings by $0.01 and $0.07 per share, respectively.  The resulting adjustment for this item for the six months ended June 30, 2014 and 2013, increased earnings by $0.01 and $0.07 per share, respectively.

Cleco management will discuss the company's second-quarter 2014 results during a conference call scheduled for 7:30 a.m. Central time (8:30 a.m. Eastern time) Thursday, July 31, 2014.  The call will be webcast live on the internet.  A replay will be available for 12 months.  Investors may access the webcast through the company's website at www.cleco.com by selecting "Investors" and then "Q2 2014 Cleco Corporation Earnings Conference Call."

Please note:  In addition to historical financial information, this news release contains forward-looking statements about future results and circumstances.  There are many risks and uncertainties with respect to such forward-looking statements, including the weather and other natural phenomena, state and federal legislative and regulatory initiatives, the timing and extent of changes in commodity prices and interest rates, the operating performance of Cleco Power's facilities, the impact of the global economic environment, and other risks and uncertainties more fully described in the company's latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.  Actual results may differ materially from those indicated in such forward-looking statements.

Cleco Corporation is a public utility holding company headquartered in Pineville, La. Cleco owns a regulated electric utility company, Cleco Power LLC, which is engaged principally in the generation, transmission, distribution and sale of electricity primarily in Louisiana. Cleco Power owns 11 generating units with a total nameplate capacity of 3,340 megawatts. Cleco Power serves approximately 284,000 customers in Louisiana through its retail business and supplies wholesale power in Louisiana and Mississippi.