18672--2/28/2006--CLECO

related topics

{operation, natural, condition}

{cost, operation, labor}

{financial, litigation, operation}

{cost, regulation, environmental}

{capital, credit, financial}

{regulation, government, change}

{debt, indebtedness, cash}

{gas, price, oil}

Cleco Power is exposed to certain risks related to the design, construction 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 impact on Cleco Power's financial condition, results of operations and cash flows. CES's bankruptcy and failure to perform its obligations under the Calpine Tolling Agreements will likely have a material adverse impact on Cleco's results of operations and cash flows. The LPSC may reduce the amount recoverable by Cleco Power in respect of storm restoration costs. If Cleco Power is unable to extend the current RSP or if the LPSC makes modifications to Cleco Power's retail rates subsequent to September 2006, the earnings of Cleco Power could be reduced. The LPSC conducts fuel audits that could result in Cleco Power making substantial refunds of previously recorded revenue. A successful request for rehearing or appeal of Cleco Power's CCN could have a material adverse impact on Cleco Power's financial condition and cash flows. Nonperformance of Cleco Power's power purchase agreements and transmission constraints could have a material adverse impact on Cleco Power's results of operations, financial condition, and cash flows. 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's costs of compliance with environmental laws, regulations and permits are significant, and the costs of compliance with new environmental laws, regulations and permits could be significant and reduce Cleco's profitability. Evangeline and Acadia have certain plant performance obligations under their respective tolling agreements. Failure to perform these obligations could expose each entity to adverse financial penalties. Failure by Williams to perform its obligations under the Evangeline Tolling Agreement would likely have a material adverse impact on Cleco's results of operations, financial condition, and cash flows. Cleco Power's future electricity sales could be adversely impacted by high energy prices and other economic factors affecting its customers. Cleco Power's generation facilities are subject to unplanned outages and significant maintenance requirements. Cleco Corporation is a holding company, and its ability to meet its debt obligations and pay dividends on its common stock is dependent on the cash generated by its subsidiaries. The FERC regulates Cleco Power's transmission service and other wholesale rates. If the FERC were to substantially change Cleco Power's rates for these services, the results of operations and cash flows of Cleco Power could be adversely affected.

Full 10-K form ▸

18672--2/28/2006--CLECO_CORP