1089819--2/27/2007--CLECO

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Rodemacher Unit 3 Construction Costs The recovery of costs incurred to construct Rodemacher Unit 3 is subject to LPSC review and approval , and some of the costs could be disallowed. Rodemacher Unit 3 Technical Specifications Cleco Power is exposed to certain risks related to the design, co nstruction and operation of Rodemacher Unit 3. This project has technology risk, fuel supply risk and general contractor and certain material subcontractor performance risk, each of which could have a material adverse effect on the Registrants results of operations, financial condition, and cash flows. CES s bankruptcy and failure to perform its obligations under the Calpine Tolling Agreements could have a material adverse effect on Cleco Corporation s results of operations, financial condition, and cash flows. The recovery of deferred lignite costs related to the Lignite Mining Agreement is subject to LPSC review and approval. The LPSC conducts fuel audits that could result in Cleco Power ma king substantial refunds of previously recorded revenue. Hedging and Risk Management Activities Cleco Power is subject to market risk associated with economic hedges relating to open natural gas contracts. Cleco has risk management policies which cannot eliminate all risk involved in its energy commodity activities. Cleco Power s future electricity sales and corresponding base rev enue and cash flows could be adversely affected by general economic conditions. Nonperformance of Cleco Power s power purchase agreements and transmission constraints could have a material adverse effect on the Registrants results of operations, financial condition, and cash flows. The operating results of Cleco Power are affected by weather cond itions and may fluctuate on a seasonal and quarterly basis. Cleco Power is subject to the fluctuation in the market prices of various commodities which may increase the cost of producing power. has certain plant performance obligations defined in its tolling agreement. Failure to perform these obligations could expose Evangeline to adverse financial penalties. the FERC ultimately may take with respect to the results of the current FERC Staff investigation could have a material adverse effect on the Registrants results of operations, financial condition, and cash flows. the FERC ultimately may take with respect to the results of the current FERC Staff investigation could have a material adverse effect on the Registrants results of operations, financial condition, and cash flows. Cleco Power s generation facilities are susceptible to unplanned outages, significant maintenance requirements and interruption of fuel deliveries. the FERC s authority was expanded to include the establishment and enforcement of mandatory reliability standards on the transmission system as well as the capacity to impose fines and civil penalties on those who fail to comply with those standards. Cleco s costs of compliance with environmental laws and regul ations are significant. The costs of compliance with new environmental laws and regulations, as well as the incurrence of incremental environmental liabilities, could also be significant to the Registrants. The amount of storm restoration costs recoverable from Cleco Power s retail customers is not final and may be reduced. Termination of the Rodemacher Unit 3 Project or the Amended EPC Contract The abandonment of the Rodemacher Unit 3 project or termination of the Amended EPC Contract could result in unrecoverable costs. Cleco Power s retail electric rates and business practices are reg A downgrade in Cleco Corporation s or Cleco Power s credit rating could result in an increase in their respective borrowing costs and a reduced pool of potential investors and funding sources. Cleco Corporation is a holding company, and its ability to meet its debt obligations and pay dividends on its common stock is depen dent on the cash generated by its subsidiaries. Failure by Williams to perform its obligations under the Evangeline Tolling Agreement could likely have a material adverse effect on Cleco s results of operations, financial condition, and cash flows.

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1089819--2/27/2007--CLECO_CORP