Cleco Corporate Holdings LLC (Form: 10-Q, Received: 05/02/2018 13:12:27)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-15759

CLECO CORPORATE HOLDINGS LLC

(Exact name of registrant as specified in its charter)



Louisiana (State or other jurisdiction of incorporation or organization)	72-1445282 (I.R.S. Employer Identification No.)

2030 Donahue Ferry Road, Pineville, Louisiana (Address of principal executive offices)	71360-5226 (Zip Code)

Registrant’s telephone number, including area code: (318) 484-7400

Commission file number 1-05663

CLECO POWER LLC

(Exact name of registrant as specified in its charter)



Louisiana (State or other jurisdiction of incorporation or organization)	72-0244480 (I.R.S. Employer Identification No.)

2030 Donahue Ferry Road, Pineville, Louisiana (Address of principal executive offices)	71360-5226 (Zip Code)

Registrant’s telephone number, including area code: (318) 484-7400

Indicate by check mark whether the Registrants: (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrants were required to file such reports) and (2) have been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the Registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrants were required to submit and post such files). Yes x No ¨

Indicate by check mark whether Cleco Corporate Holdings LLC is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x (Do not check if a smaller reporting company) Smaller reporting company ¨ Emerging growth company ¨ If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether Cleco Power LLC is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x (Do not check if a smaller reporting company) Smaller reporting company ¨ Emerging growth company ¨ If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the Registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act) Yes ¨ No x

Cleco Corporate Holdings LLC has no common stock outstanding. All of the outstanding equity of Cleco Corporate Holdings LLC is held by Cleco Group LLC, a wholly owned subsidiary of Cleco Partners L.P.

Cleco Power LLC, a wholly owned subsidiary of Cleco Corporate Holdings LLC, meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format.



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

This Combined Quarterly Report on Form 10-Q is separately filed by Cleco Corporate Holdings LLC and Cleco Power LLC. Information in this filing relating to Cleco Power LLC is filed by Cleco Corporate Holdings LLC and separately by Cleco Power LLC on its own behalf. Cleco Power LLC makes no representation as to information relating to Cleco Corporate Holdings LLC (except as it may relate to Cleco Power LLC) or any other affiliate or subsidiary of Cleco Corporate Holdings LLC.

This report should be read in its entirety as it pertains to each respective Registrant. The Notes to the Unaudited Condensed Consolidated Financial Statements are combined.



TABLE OF CONTENTS
		PAGE
GLOSSARY OF TERMS		3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		5

PART I	Financial Information
ITEM 1.	Cleco — Condensed Consolidated Financial Statements (Unaudited)	7
	Cleco Power — Condensed Consolidated Financial Statements (Unaudited)	14
	Notes to the Unaudited Condensed Consolidated Financial Statements	20
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	48
ITEM 4.	Controls and Procedures	49

PART II	Other Information
ITEM 1.	Legal Proceedings	50
ITEM 1A.	Risk Factors	50
ITEM 4.	Mine Safety Disclosures	50
ITEM 6.	Exhibits	50
	Signatures	51



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

GLOSSARY OF TERMS

Abbreviations or acronyms used in this filing, including all items in Parts I and II, are defined below.



ABBREVIATION OR ACRONYM	DEFINITION
401(k) Plan	Cleco Power 401(k) Savings and Investment Plan
ABR	Alternate Base Rate which is the greater of the prime rate, the federal funds effective rate plus 0.50%, or LIBOR plus 1.0%
Acadia	Acadia Power Partners, LLC, previously a wholly owned subsidiary of Midstream. Acadia Power Partners, LLC was dissolved effective August 29, 2014.
Acadia Unit 1	Cleco Power’s 580-MW, combined cycle power plant located at the Acadia Power Station in Eunice, Louisiana
Acadia Unit 2	Entergy Louisiana’s 580-MW, combined cycle power plant located at the Acadia Power Station in Eunice, Louisiana, which is operated by Cleco Power
AFUDC	Allowance for Funds Used During Construction
ALJ	Administrative Law Judge
Amended Lignite Mining Agreement	Amended and restated lignite mining agreement effective December 29, 2009
AMI	Advanced Metering Infrastructure
AOCI	Accumulated Other Comprehensive Income (Loss)
ARO	Asset Retirement Obligation
ARRA	American Recovery and Reinvestment Act of 2009
Attala	Attala Transmission LLC, a wholly owned subsidiary of Cleco Holdings
bcIMC	British Columbia Investment Management Corporation
CCR	Coal combustion by-products or residual
CEO	Chief Executive Officer
CFO	Chief Financial Officer
Cleco	Cleco Holdings and its subsidiaries
Cleco Cajun	Cleco Cajun LLC, formerly Cleco Energy LLC, a wholly owned subsidiary of Cleco Holdings
Cleco Corporation	Pre-merger entity that was converted to a limited liability company and changed its name to Cleco Corporate Holdings LLC on April 13, 2016
Cleco Group	Cleco Group LLC, a wholly owned subsidiary of Cleco Partners
Cleco Holdings	Cleco Corporate Holdings LLC, a wholly owned subsidiary of Cleco Group
Cleco Katrina/Rita	Cleco Katrina/Rita Hurricane Recovery Funding LLC, a wholly owned subsidiary of Cleco Power
Cleco Partners	Cleco Partners L.P., a Delaware limited partnership that is owned by a consortium of investors, including funds or investment vehicles managed by MIRA, bcIMC, John Hancock Financial, and other infrastructure investors
Cleco Power	Cleco Power LLC and its subsidiaries, a wholly owned subsidiary of Cleco Holdings
Cottonwood Energy	Cottonwood Energy Company LP, an indirect subsidiary of NRG South Central. Upon closing of the Purchase and Sale Agreement, Cottonwood Energy will become an indirect subsidiary of Cleco Holdings.
Coughlin	Cleco Power’s 775-MW, combined-cycle power plant located in St. Landry, Louisiana
DHLC	Dolet Hills Lignite Company, LLC, a wholly owned subsidiary of SWEPCO
Diversified Lands	Diversified Lands LLC, a wholly owned subsidiary of Cleco Holdings
Dolet Hills	A facility consisting of Dolet Hills Power Station, the Dolet Hills mine, and the Oxbow mine
Dolet Hills Power Station	A 650-MW generating unit at Cleco Power’s plant site in Mansfield, Louisiana. Cleco Power has a 50% ownership interest in the capacity of Dolet Hills.
EAC	Environmental Adjustment Clause
EBITDA	Earnings before interest, taxes, depreciation, and amortization
Entergy Gulf States	Entergy Gulf States Louisiana, LLC
Entergy Louisiana	Entergy Louisiana, LLC
EPA	U.S. Environmental Protection Agency
ERO	Electric Reliability Organization
Evangeline	Cleco Evangeline LLC, a wholly owned subsidiary of Midstream
FAC	Fuel Adjustment Clause
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
FTR	Financial Transmission Right
FRP	Formula Rate Plan
GAAP	Generally Accepted Accounting Principles in the U.S.
IRS	Internal Revenue Service
kWh	Kilowatt-hour(s)
LIBOR	London Interbank Offered Rate
LMP	Locational Marginal Price
LPSC	Louisiana Public Service Commission
Madison Unit 3	A 641-MW generating unit at Cleco Power’s plant site in Boyce, Louisiana
MATS	Mercury and Air Toxics Standards



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q



ABBREVIATION OR ACRONYM	DEFINITION
Merger	Merger of Merger Sub with and into Cleco Corporation pursuant to the terms of the Merger Agreement which was completed on April 13, 2016
Merger Agreement	Agreement and Plan of Merger, dated as of October 17, 2014, by and among Cleco Partners, Merger Sub, and Cleco Corporation
Merger Commitments	Cleco Partners’, Cleco Group’s, Cleco Holdings’, and Cleco Power’s 77 commitments to the LPSC as defined in Docket No. U-33434 of which a performance report must be filed annually by October 31 for the 12 months ending June 30
Merger Sub	Cleco MergerSub Inc., previously an indirect wholly owned subsidiary of Cleco Partners that was merged with and into Cleco Corporation, with Cleco Corporation surviving the Merger, and Cleco Corporation converting to a limited liability company and changing its name to Cleco Holdings
Midstream	Cleco Midstream Resources LLC, a wholly owned subsidiary of Cleco Holdings
MIRA	Macquarie Infrastructure and Real Assets Inc.
MISO	Midcontinent Independent System Operator, Inc.
Moody’s	Moody’s Investors Service, a credit rating agency
MW	Megawatt(s)
MWh	Megawatt-hour(s)
NERC	North American Electric Reliability Corporation
NMTC	New Markets Tax Credit
NMTC Fund	USB NMTC Fund 2008-1 LLC was formed to invest in projects qualifying for New Markets Tax Credits and Solar Projects
Not Meaningful	A percentage comparison of these items is not statistically meaningful because the percentage difference is greater than 1,000%
NRG Energy	NRG Energy, Inc.
NRG South Central	NRG South Central Generating LLC
Other Benefits	Includes medical, dental, vision, and life insurance for Cleco’s retirees
Oxbow	Oxbow Lignite Company, LLC, 50% owned by Cleco Power and 50% owned by SWEPCO
PCB	Polychlorinated biphenyl
Perryville	Perryville Energy Partners, L.L.C., a wholly owned subsidiary of Cleco Holdings
Purchase and Sale Agreement	Purchase and Sale Agreement, dated as of February 6, 2018, by and among NRG Energy, NRG South Central, and Cleco Energy LLC (now Cleco Cajun)
RE	Regional Entity
Registrant(s)	Cleco Holdings and/or Cleco Power
ROE	Return on Equity
RTO	Regional Transmission Organization
S&P	Standard & Poor’s Ratings Services, a credit rating agency
SEC	U.S. Securities and Exchange Commission
SERP	Supplemental Executive Retirement Plan
SPP	Southwest Power Pool
SPP RE	Southwest Power Pool Regional Entity
SSR	System Support Resource
START	Strategic Alignment and Real-Time Transformation
Support Group	Cleco Support Group LLC, a wholly owned subsidiary of Cleco Holdings
SWEPCO	Southwestern Electric Power Company, an electric utility subsidiary of American Electric Power Company, Inc.
TCJA	Tax Cuts and Jobs Act of 2017
Teche Unit 3	A 359-MW generating unit at Cleco Power’s plant site in Baldwin, Louisiana
VaR	Value-at-Risk



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Combined Quarterly Report on Form 10-Q includes “forward-looking statements” about future events, circumstances, and results. All statements other than statements of historical fact included in this Combined Quarterly Report are forward-looking statements, including, without limitation, future capital expenditures; business strategies; goals, beliefs, plans and objectives; competitive strengths; market developments; development and operation of facilities; growth in sales volume; meeting capacity requirements; expansion of service to existing customers and service to new customers; future environmental regulations and remediation liabilities; electric customer credits; and the anticipated outcome of various regulatory and legal proceedings. Although the Registrants believe that the expectations reflected in such forward-looking statements are reasonable, such forward-looking statements are based on numerous assumptions (some of which may prove to be incorrect) and are subject to risks and uncertainties that could cause the actual results to differ materially from the Registrants’ expectations. In addition to any assumptions and other factors referred to specifically in connection with these forward-looking statements, the following list identifies some of the factors that could cause the Registrants’ actual results to differ materially from those contemplated in any of the Registrants’ forward-looking statements:


•	the effects of the Merger on Cleco Holdings’ and Cleco Power’s business relationships, operating results, and business generally,

•

regulatory factors such as changes in rate-setting practices or policies; the unpredictability in political actions of governmental regulatory bodies; adverse regulatory ratemaking actions; recovery of investments made under traditional regulation; recovery of storm restoration costs; the frequency, timing, and amount of rate increases or decreases; the impact that rate cases or requests for FRP extensions may have on operating decisions of Cleco Power; the results of periodic NERC, LPSC, and FERC audits; participation in MISO and the related operating challenges and uncertainties, including increased wholesale competition relative to additional suppliers; and compliance with the ERO reliability standards for bulk power systems by Cleco Power,


•	the ability to recover fuel costs through the FAC,


•	the ability to close the proposed transaction with NRG Energy and NRG South Central, including the related financings,


•	the ability to successfully integrate the assets to be acquired in the proposed transaction with NRG Energy and NRG South Central, if completed, into Cleco’s operations,

•

factors affecting utility operations, such as unusual weather conditions or other natural phenomena; catastrophic weather-related damage caused by hurricanes and other storms or severe drought conditions; unscheduled generation outages; unanticipated maintenance or repairs; unanticipated changes to fuel costs or fuel supply costs, shortages, transportation problems, or other developments; fuel mix of Cleco’s generating facilities; decreased customer

load; environmental incidents and compliance costs; and power transmission system constraints,


•	reliance on third parties for determination of Cleco Power’s commitments and obligations to markets for generation resources and reliance on third-party transmission services,


•	global and domestic economic conditions, including the ability of customers to continue paying their utility bills, related growth and/or down-sizing of businesses in Cleco’s service area, monetary fluctuations, changes in commodity prices, and inflation rates,


•	political uncertainty in the U.S., including the ongoing debates related to the U.S. federal government budget and debt ceiling, and volatility and disruption in global capital and credit markets,


•	the ability of the lignite reserves at Dolet Hills to provide sufficient fuel to the Dolet Hills Power Station until at least 2036,


•	Cleco Power’s ability to maintain its right to sell wholesale power at market-based rates within its control area,


•	Cleco Power’s dependence on energy from sources other than its facilities and future sources of such additional energy,


•	reliability of Cleco Power’s generating facilities,


•	the imposition of energy efficiency requirements or increased conservation efforts of customers,


•	the impact of current or future environmental laws and regulations, including those related to CCRs, greenhouse gases, and energy efficiency that could limit or terminate the operation of certain generating units, increase costs, or reduce customer demand for electricity,


•	the ability to recover costs of compliance with environmental laws and regulations, including those through the EAC,


•	financial or regulatory accounting principles or policies imposed by FASB, the SEC, FERC, the LPSC, or similar entities with regulatory or accounting oversight,


•	changing market conditions and a variety of other factors associated with physical energy, financial transactions, and energy service activities, including, but not limited to, price, basis, credit, liquidity, volatility, capacity, transmission, interest rates, and warranty risks,


•	legal, environmental, and regulatory delays and other obstacles associated with acquisitions (including the NRG South Central acquisition), reorganizations, investments in joint ventures, or other capital projects,


•	costs and other effects of legal and administrative proceedings, settlements, investigations, claims, and other matters,


•	the availability and use of alternative sources of energy and technologies, such as wind, solar, battery storage, and distributed generation,


•	changes in federal, state, or local laws (including the TCJA and other tax laws), changes in tax rates, disallowances of



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

tax positions, or changes in other regulating policies that may result in a change to tax benefits or expenses,


•	the restriction on the ability of Cleco Power to make distributions to Cleco Holdings in certain instances, as a result of the Merger Commitments,


•	Cleco Holdings’ dependence on the earnings, dividends, or distributions from its subsidiaries to meet its debt obligations,


•	acts of terrorism, cyber attacks, data security breaches or other attempts to disrupt Cleco’s business or the business of third parties, or other man-made disasters,


•	nonperformance by and creditworthiness of the guarantor counterparty of the NMTC Fund,


•	credit ratings of Cleco Holdings and Cleco Power,


•	the ability to remain in compliance with debt covenants,


•	the availability or cost of capital resulting from changes in global markets, Cleco’s business or financial condition, interest rates, or market perceptions of the electric utility industry and energy-related industries, and


•	employee workforce factors, including aging workforce, changes in management, and inadequate resources.

For more discussion of these factors and other factors that could cause actual results to differ materially from those contemplated in the Registrants’ forward-looking statements, see Part I, Item 1A, “Risk Factors” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2017 .

All subsequent written and oral forward-looking statements attributable to the Registrants, or persons acting on their behalf, are expressly qualified in their entirety by the factors identified above.

Any forward-looking statement is considered only as of the date of this Combined Quarterly Report on Form 10-Q and, except as required by law, the Registrants undertake no obligation to update any forward-looking statements, whether as a result of changes in actual results, changes in assumptions, or other factors affecting such statements.



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

PART I — FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Cleco

These unaudited Condensed Consolidated Financial Statements should be read in conjunction with Cleco’s Consolidated Financial Statements and Notes included in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2017 . For more information on the basis of presentation, see “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Basis of Presentation.”



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q



CLECO

Condensed Consolidated Statements of Income (Unaudited)
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2018			2017
Operating revenue
Electric operations	$	262,211		$	234,056
Other operations	22,196			16,880
Gross operating revenue	284,407			250,936
Electric customer credits	(7,647		)	(435		)
Operating revenue, net	276,760			250,501
Operating expenses
Fuel used for electric generation	67,016			69,873
Power purchased for utility customers	53,159			31,963
Other operations	27,967			29,327
Maintenance	29,119			24,523
Depreciation and amortization	42,507			40,851
Taxes other than income taxes	12,258			12,502
Total operating expenses	232,026			209,039
Operating income	44,734			41,462
Interest income	783			312
Allowance for equity funds used during construction	2,363			911
Other income	554			1,370
Other expense	(3,554		)	(2,938		)
Interest charges
Interest charges, including amortization of debt issuance costs, premiums, and discounts, net	32,030			31,945
Allowance for borrowed funds used during construction	(873		)	(227		)
Total interest charges	31,157			31,718
Income before income taxes	13,723			9,399
Federal and state income tax expense	2,862			3,107
Net income	$	10,861		$	6,292
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q



CLECO

Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2018		2017
Net income	$	10,861	$	6,292
Other comprehensive income (loss), net of tax
Postretirement benefits gain (loss) (net of tax expense of $15 in 2018 and tax benefit of $1,370 in 2017)	43		(2,191		)
Total other comprehensive income (loss), net of tax	43		(2,191		)
Comprehensive income, net of tax	$	10,904	$	4,101
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q



CLECO

Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT MAR. 31, 2018			AT DEC. 31, 2017
Assets
Current assets
Cash and cash equivalents	$	176,508		$	119,040
Restricted cash and cash equivalents	6,727			13,081
Customer accounts receivable (less allowance for doubtful accounts of $1,424 in 2018 and $1,457 in 2017)	52,277			60,117
Other accounts receivable	22,680			30,806
Unbilled revenue	30,011			36,398
Fuel inventory, at average cost	73,215			87,520
Materials and supplies, at average cost	88,420			85,404
Energy risk management assets	4,828			7,396
Accumulated deferred fuel	23,053			13,980
Cash surrender value of company-/trust-owned life insurance policies	82,771			83,117
Prepayments	6,690			9,050
Regulatory assets	22,207			24,670
Other current assets	681			1,146
Total current assets	590,068			571,725
Property, plant, and equipment
Property, plant, and equipment	3,629,249			3,594,525
Accumulated depreciation	(221,941		)	(192,348		)
Net property, plant, and equipment	3,407,308			3,402,177
Construction work in progress	212,847			186,629
Total property, plant, and equipment, net	3,620,155			3,588,806
Equity investment in investee	18,172			18,172
Goodwill	1,490,797			1,490,797
Restricted cash and cash equivalents	19,327			20,081
Regulatory assets	425,041			432,358
Intangible assets	107,881			114,850
Other deferred charges	38,540			41,593
Total assets	$	6,309,981		$	6,278,382
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

(Continued on next page)



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q



CLECO

Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT MAR. 31, 2018			AT DEC. 31, 2017
Liabilities and member’s equity
Liabilities
Current liabilities
Long-term debt due within one year	$	19,875		$	19,193
Accounts payable	95,542			147,562
Customer deposits	59,765			58,582
Provision for rate refund	11,805			4,206
Taxes payable, net	34,264			22,698
Interest accrued	40,924			14,703
Deferred compensation	11,322			12,132
Other current liabilities	21,633			21,278
Total current liabilities	295,130			300,354
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	618,657			614,812
Postretirement benefit obligations	243,084			242,135
Regulatory liabilities - deferred taxes, net	138,329			140,426
Restricted storm reserve	14,705			14,469
Other deferred credits	38,251			33,724
Total long-term liabilities and deferred credits	1,053,026			1,045,566
Long-term debt, net	2,874,064			2,836,105
Total liabilities	4,222,220			4,182,025
Commitments and contingencies (Note 12)
Member’s equity
Membership interest	2,069,376			2,069,376
Retained earnings	21,263			29,902
Accumulated other comprehensive loss	(2,878		)	(2,921		)
Total member’s equity	2,087,761			2,096,357
Total liabilities and member’s equity	$	6,309,981		$	6,278,382
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q



CLECO

Condensed Consolidated Statements of Cash Flows (Unaudited)
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2018				2017
Operating activities
Net income	$	10,861			$	6,292
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	46,754				46,727
Unearned compensation expense	1,116				955
Allowance for equity funds used during construction	(2,363		)		(911		)
Deferred income taxes	1,733				3,041
Deferred fuel costs	(11,353		)		(2,982		)
Cash surrender value of company-/trust-owned life insurance	346				(1,702		)
Changes in assets and liabilities
Accounts receivable	10,563				8,346
Unbilled revenue	6,387				4,765
Fuel inventory and materials and supplies	11,573				(7,733		)
Prepayments	2,199				1,318
Accounts payable	(40,239		)		(27,148		)
Customer deposits	3,500				2,622
Provision for merger commitments	(1,187		)		(3,866		)
Postretirement benefit obligations	1,007				1,213
Regulatory assets and liabilities, net	3,960				2,599
Other deferred accounts	5,871				1,920
Taxes accrued	11,108				12,568
Interest accrued	26,220				25,620
Other operating	(93		)		1,138
Net cash provided by operating activities	87,963				74,782
Investing activities
Additions to property, plant, and equipment	(64,133		)		(47,890		)
Allowance for equity funds used during construction	2,363				911
Reimbursement for property loss	1,172				39
Return of equity investment in tax credit fund	2,775				426
Other investing	75				(388		)
Net cash used in investing activities	(57,748		)		(46,902		)
Financing activities
Issuances of long-term debt	50,000				—
Repayment of long-term debt	(9,700		)		(9,060		)
Distributions to member	(19,500		)		(28,955		)
Other financing	(655		)		(213		)
Net cash provided by (used in) financing activities	20,145				(38,228		)
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	50,360				(10,348		)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	152,202			⁽¹⁾	69,571
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	202,562		⁽²⁾	$	59,223

Supplementary cash flow information
Interest paid, net of amount capitalized	$	4,236			$	4,011
Income taxes refunded, net	$	270			$	1
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	35,067			$	27,617
⁽¹⁾ Includes cash and cash equivalents of $119,040, current restricted cash and cash equivalents of $13,081, and non-current restricted cash and cash equivalents of $20,081. ⁽²⁾ Includes cash and cash equivalents of $176,508, current restricted cash and cash equivalents of $6,727, and non-current restricted cash and cash equivalents of $19,327. The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q



CLECO

Condensed Consolidated Statements of Changes in Member’s Equity (Unaudited)
(THOUSANDS)	MEMBERSHIP INTEREST		RETAINED EARNINGS			AOCI			TOTAL MEMBER’S EQUITY
Balances, Dec. 31, 2017	$	2,069,376	$	29,902		$	(2,921	)	$	2,096,357
Distributions to member	—		(19,500		)	—			(19,500		)
Net income	—		10,861			—			10,861
Other comprehensive income, net of tax	—		—			43			43
Balances, Mar. 31, 2018	$	2,069,376	$	21,263		$	(2,878	)	$	2,087,761
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Cleco Power

These unaudited Condensed Consolidated Financial Statements should be read in conjunction with Cleco Power’s Consolidated Financial Statements and Notes included in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2017 . For more information on the basis of presentation, see “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Basis of Presentation.”



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q



CLECO POWER

Condensed Consolidated Statements of Income (Unaudited)
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2018			2017
Operating revenue
Electric operations	$	264,631		$	237,553
Other operations	22,195			16,365
Affiliate revenue	208			219
Gross operating revenue	287,034			254,137
Electric customer credits	(7,647		)	(435		)
Operating revenue, net	279,387			253,702
Operating expenses
Fuel used for electric generation	67,016			69,873
Power purchased for utility customers	53,159			31,963
Other operations	27,307			30,264
Maintenance	29,078			24,420
Depreciation and amortization	40,388			38,758
Taxes other than income taxes	11,918			12,000
Total operating expenses	228,866			207,278
Operating income	50,521			46,424
Interest income	641			266
Allowance for equity funds used during construction	2,363			911
Other income	740			210
Other expense	(2,608		)	(1,998		)
Interest charges
Interest charges, including amortization of debt issuance costs, premiums, and discounts, net	18,529			18,331
Allowance for borrowed funds used during construction	(873		)	(227		)
Total interest charges	17,656			18,104
Income before income taxes	34,001			27,709
Federal and state income tax expense	7,997			9,855
Net income	$	26,004		$	17,854
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q



CLECO POWER

Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2018		2017
Net income	$	26,004	$	17,854
Other comprehensive income (loss), net of tax
Postretirement benefits gain (loss) (net of tax expense of $83 in 2018 and tax benefit of $262 in 2017)	233		(420		)
Amortization of interest rate derivatives to earnings (net of tax expense of $22 in 2018 and $33 in 2017)	64		53
Total other comprehensive income (loss), net of tax	297		(367		)
Comprehensive income, net of tax	$	26,301	$	17,487
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q



CLECO POWER

Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)	AT MAR. 31, 2018			AT DEC. 31, 2017
Assets
Utility plant and equipment
Property, plant, and equipment	$	4,924,970		$	4,893,484
Accumulated depreciation	(1,737,911		)	(1,712,590		)
Net property, plant, and equipment	3,187,059			3,180,894
Construction work in progress	212,727			185,507
Total utility plant and equipment, net	3,399,786			3,366,401
Current assets
Cash and cash equivalents	128,182			69,816
Restricted cash and cash equivalents	6,727			13,081
Customer accounts receivable (less allowance for doubtful accounts of $1,424 in 2018 and $1,457 in 2017)	52,277			60,117
Accounts receivable - affiliate	1,311			1,355
Other accounts receivable	22,278			30,680
Unbilled revenue	30,011			36,398
Fuel inventory, at average cost	73,215			87,520
Materials and supplies, at average cost	88,420			85,404
Energy risk management assets	4,828			7,396
Accumulated deferred fuel	23,053			13,980
Cash surrender value of company-owned life insurance policies	20,341			20,278
Prepayments	5,000			7,236
Regulatory assets	13,350			15,812
Other current assets	—			475
Total current assets	468,993			449,548
Equity investment in investee	18,172			18,172
Restricted cash and cash equivalents	19,306			20,060
Regulatory assets	252,889			257,408
Intangible asset	37,216			41,701
Other deferred charges	35,125			35,451
Total assets	$	4,231,487		$	4,188,741

Liabilities and member’s equity
Member’s equity	$	1,548,980		$	1,550,679
Long-term debt, net	1,381,409			1,341,475
Total capitalization	2,930,389			2,892,154
Current liabilities
Long-term debt due within one year	19,875			19,193
Accounts payable	87,607			134,374
Accounts payable - affiliate	9,969			8,697
Customer deposits	59,765			58,582
Provision for rate refund	11,805			4,206
Taxes payable, net	45,197			31,611
Interest accrued	22,638			7,083
Other current liabilities	16,960			16,172
Total current liabilities	273,816			279,918
Commitments and contingencies (Note 12)
Long-term liabilities and deferred credits
Accumulated deferred federal and state income taxes, net	663,255			656,362
Postretirement benefit obligations	174,971			173,747
Regulatory liabilities - deferred taxes, net	138,329			140,426
Restricted storm reserve	14,705			14,469
Other deferred credits	36,022			31,665
Total long-term liabilities and deferred credits	1,027,282			1,016,669
Total liabilities and member’s equity	$	4,231,487		$	4,188,741
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q



CLECO POWER

Condensed Consolidated Statements of Cash Flows (Unaudited)
	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2018				2017
Operating activities
Net income	$	26,004			$	17,854
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	42,022				40,871
Allowance for equity funds used during construction	(2,363		)		(911		)
Deferred income taxes	4,692				10,135
Deferred fuel costs	(11,353		)		(2,982		)
Changes in assets and liabilities
Accounts receivable	10,710				8,064
Unbilled revenue	6,387				4,765
Fuel inventory and materials and supplies	11,573				(7,733		)
Prepayments	2,075				925
Accounts payable	(35,030		)		(23,836		)
Accounts payable, affiliate	672				2,083
Customer deposits	3,500				2,622
Provision for merger commitments	(1,187		)		(3,866		)
Postretirement benefit obligations	1,061				1,026
Regulatory assets and liabilities, net	3,463				2,103
Other deferred accounts	6,116				1,494
Taxes accrued	13,127				11,769
Interest accrued	15,555				14,230
Other operating	2,322				2,566
Net cash provided by operating activities	99,346				81,179
Investing activities
Additions to property, plant, and equipment	(63,343		)		(46,744		)
Allowance for equity funds used during construction	2,363				911
Reimbursement of property loss	1,172				39
Other investing	75				242
Net cash used in investing activities	(59,733		)		(45,552		)
Financing activities
Issuances of long-term debt	50,000				—
Repayment of long-term debt	(9,700		)		(9,060		)
Distributions to parent	(28,000		)		(35,000		)
Other financing	(655		)		(675		)
Net cash provided by (used in) financing activities	11,645				(44,735		)
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	51,258				(9,108		)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	102,957			⁽¹⁾	67,955
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	154,215		⁽²⁾	$	58,847

Supplementary cash flow information
Interest paid, net of amount capitalized	$	1,789			$	2,212
Supplementary non-cash investing and financing activities
Accrued additions to property, plant, and equipment	$	35,038			$	27,493
⁽¹⁾ Includes cash and cash equivalents of $69,816, current restricted cash and cash equivalents of $13,081, and non-current restricted cash and cash equivalents of $20,060. ⁽²⁾ Includes cash and cash equivalents of $128,182, current restricted cash and cash equivalents of $6,727, and non-current restricted cash and cash equivalents of $19,306. The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q



CLECO POWER

Condensed Consolidated Statements of Changes in Member’s Equity (Unaudited)
(THOUSANDS)	MEMBER’S EQUITY			AOCI			TOTAL MEMBER’S EQUITY
Balances, Dec. 31, 2017	$	1,564,362		$	(13,683	)	$	1,550,679
Distributions to parent	(28,000		)	—			(28,000		)
Net income	26,004			—			26,004
Other comprehensive income, net of tax	—			297			297
Balances, Mar. 31, 2018	$	1,562,366		$	(13,386	)	$	1,548,980
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q



Index to Applicable Notes to the Unaudited Condensed Consolidated Financial Statements of Registrants

Note 1	Summary of Significant Accounting Policies	Cleco and Cleco Power
Note 2	Revenue Recognition	Cleco and Cleco Power
Note 3	Recent Authoritative Guidance	Cleco and Cleco Power
Note 4	Regulatory Assets and Liabilities	Cleco and Cleco Power
Note 5	Fair Value Accounting	Cleco and Cleco Power
Note 6	Debt	Cleco and Cleco Power
Note 7	Pension Plan and Employee Benefits	Cleco and Cleco Power
Note 8	Income Taxes	Cleco and Cleco Power
Note 9	Disclosures about Segments	Cleco
Note 10	Regulation and Rates	Cleco and Cleco Power
Note 11	Variable Interest Entities	Cleco and Cleco Power
Note 12	Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees	Cleco and Cleco Power
Note 13	Affiliate Transactions	Cleco and Cleco Power
Note 14	Intangible Assets	Cleco and Cleco Power
Note 15	Accumulated Other Comprehensive Loss	Cleco and Cleco Power
Note 16	Plan of Acquisition	Cleco and Cleco Power

Notes to the Unaudited Condensed Consolidated Financial Statements

Note 1 — Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying Condensed Consolidated Financial Statements of Cleco include the accounts of Cleco Holdings and its majority-owned subsidiaries after elimination of intercompany accounts and transactions.

Basis of Presentation

The Condensed Consolidated Financial Statements of Cleco and Cleco Power have been prepared in accordance with GAAP for interim financial information and with the instructions to the Form 10-Q and Regulation S-X. Accordingly, these Condensed Consolidated Financial Statements do not include all of the information and notes required by GAAP for annual financial statements. The year-end Condensed Consolidated Balance Sheet data was derived from audited financial statements. Because the interim Condensed Consolidated Financial Statements and the accompanying notes do not include all of the information and notes required by GAAP for annual financial statements, the Condensed Consolidated Financial Statements and other information included in this quarterly report should be read in conjunction with the Consolidated Financial Statements and accompanying notes in the Registrants’ Combined Annual Report on Form 10-K for the year ended December 31, 2017.

These Condensed Consolidated Financial Statements, in the opinion of management, reflect all normal recurring adjustments that are necessary to fairly state the financial position and results of operations of Cleco and Cleco Power. Amounts reported in Cleco and Cleco Power’s interim financial statements are not necessarily indicative of amounts expected for the annual periods due to the effects of seasonal temperature variations on energy consumption, regulatory rulings, the timing of maintenance on electric generating units, changes in mark-to-market valuations, changing commodity prices, discrete income tax items, and other factors.

In preparing financial statements that conform to GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. For information on recent authoritative guidance and its effect on financial results, see Note 3 — “Recent Authoritative Guidance.”

Restricted Cash and Cash Equivalents

Various agreements to which Cleco is subject contain covenants that restrict its use of cash. As certain provisions under these agreements are met, cash is transferred out of related escrow accounts and becomes available for its intended purposes and/or general corporate purposes.

Cleco and Cleco Power’s restricted cash and cash equivalents consisted of:



Cleco
(THOUSANDS)	AT MAR. 31, 2018		AT DEC. 31, 2017
Current
Cleco Katrina/Rita’s storm recovery bonds	$	2,601	$	8,597
Cleco Power’s charitable contributions	1,200		1,200
Cleco Power’s rate credit escrow	2,926		3,284
Total current	6,727		13,081
Non-current
Diversified Lands’ mitigation escrow	21		21
Cleco Power’s future storm restoration costs	14,705		14,456
Cleco Power’s charitable contributions	3,044		3,575
Cleco Power’s rate credit escrow	1,557		2,029
Total non-current	19,327		20,081
Total restricted cash and cash equivalents	$	26,054	$	33,162



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q



Cleco Power
(THOUSANDS)	AT MAR. 31, 2018		AT DEC. 31, 2017
Current
Cleco Katrina/Rita’s storm recovery bonds	$	2,601	$	8,597
Charitable contributions	1,200		1,200
Rate credit escrow	2,926		3,284
Total current	6,727		13,081
Non-current
Future storm restoration costs	14,705		14,456
Charitable contributions	3,044		3,575
Rate credit escrow	1,557		2,029
Total non-current	19,306		20,060
Total restricted cash and cash equivalents	$	26,033	$	33,141

Cleco Katrina/Rita has the right to bill and collect storm restoration costs from Cleco Power’s customers. As cash is collected, it is restricted for payment of administration fees, interest, and principal on storm recovery bonds. The change from December 31, 2017 , to March 31, 2018 , was due to Cleco Katrina/Rita using $9.7 million for a scheduled storm recovery bond principal payment and $1.4 million for the related interest payment, partially offset by collections of $5.1 million net of administration fees.

Fair Value Measurements and Disclosures

Risk Management

Market risk inherent in Cleco’s market risk-sensitive instruments and positions includes potential changes in value arising from changes in interest rates and the commodity market prices of power, FTRs, and natural gas in the industry on different energy exchanges. Cleco’s Energy Market Risk Management Policy authorizes the use of various derivative instruments, including exchange traded futures and option contracts, forward purchase and sales contracts, and swap transactions to reduce exposure to fluctuations in the price of power, FTRs, and natural gas. Cleco evaluates derivatives and hedging activities to determine whether the market risk-sensitive instruments and positions are required to be marked-to-market.

Cleco Power may also enter into risk mitigating positions that would not meet the requirements of a normal-purchase, normal-sale transaction in order to attempt to mitigate the volatility in customer fuel costs. These positions would be marked-to-market with the resulting gain or loss recorded on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets as a component of energy risk management assets or liabilities. Such gain or loss would be deferred as a component of deferred fuel assets or liabilities in accordance with regulatory policy. When these positions close, actual gains or losses would be included in the FAC and reflected on customers’ bills as a component of the fuel charge. There were no open natural gas positions at March 31, 2018 , or December 31, 2017 . In 2015, the LPSC approved a long-term

natural gas hedging pilot program that requires Cleco Power to establish a proposal for a program that will be designed to provide gas price stability for a minimum of five years. Cleco Power’s proposal was submitted to the LPSC in July 2017. An ALJ has been assigned to the docket and a status conference was held in October 2017. On February 28, 2018, Cleco Power responded to LPSC data requests for the gas hedging docket. Cleco Power is currently awaiting a new procedural schedule to be established.

Cleco Power purchases FTRs in auctions facilitated by MISO. The majority of its FTRs are purchased in annual auctions during the second quarter, but Cleco Power may purchase additional FTRs in monthly auctions. FTRs are derivative instruments which represent economic hedges of future congestion charges that will be incurred in serving Cleco Power’s customer load. FTRs are not designated as hedging instruments for accounting purposes. Cleco Power records FTRs at their estimated fair value when purchased. Each accounting period, Cleco Power adjusts the carrying value of FTRs to their estimated fair value based on the most recent MISO FTR auction prices. Unrealized gains or losses on FTRs held by Cleco Power are included in Accumulated deferred fuel on Cleco Power’s Condensed Consolidated Balance Sheets. Realized gains or losses on settled FTRs are recorded in Fuel used for electric generation on Cleco Power’s Condensed Consolidated Statements of Income. For more information on FTRs, see Note 5 — “Fair Value Accounting — Commodity Contracts.”

Cleco and Cleco Power maintain a master netting agreement policy and monitor credit risk exposure through review of counterparty credit quality, aggregate counterparty credit exposure, and aggregate counterparty concentration levels. Cleco manages these risks by establishing appropriate credit and concentration limits on transactions with counterparties and requiring contractual guarantees, cash deposits, or letters of credit from counterparties or their affiliates, as deemed necessary. Cleco Power has agreements in place with various counterparties that authorize the netting of financial buys and sells and contract payments to mitigate credit risk for transactions entered into for risk management purposes.

Cleco and Cleco Power may enter into contracts to mitigate the volatility in interest rate risk. These contracts include, but are not limited to, interest rate swaps and treasury rate locks. For the three months ended March 31, 2018, and March 31, 2017, Cleco did not enter into any contracts to mitigate the volatility in interest rate risk.



Note 2 — Revenue Recognition

Cleco adopted the accounting guidance for revenue recognition and all related amendments on January 1, 2018, using the modified retrospective method. The guidance affects entities that enter into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. The core principle of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Application of the new revenue standard did not result in a cumulative effect adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The impact of the adoption of the new standard



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

is not material to the results of operations, financial condition, or cash flows of the Registrants.

Revenue from Contracts with Customers

Retail Utility Revenue

Cleco’s revenue from contracts with customers is generated primarily from Cleco Power’s regulated revenue to retail residential, commercial, and industrial customers. Cleco recognizes retail revenue from these contracts as a series, and progress towards satisfaction of the performance obligation is measured using an output method based on kWh delivered. Accordingly, revenue from electricity sales is recognized as energy is delivered to the customer. Cleco bills retail customers, based on rates regulated by the LPSC, on a monthly basis with payments generally due within 20 days of the invoice date. Cleco records retail revenue under the invoice practical expedient, which states that if an entity has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date, the entity may recognize revenue in the amount that the entity has a right to invoice.

Included in Cleco’s retail revenue is unbilled electric revenue which represents the amount customers will be billed for services rendered from the last meter reading to the end of the respective accounting period. Cleco uses actual customer energy consumption data available from AMI to calculate unbilled revenue.

Wholesale Revenue

Wholesale revenue is generated primarily through the sale of energy and capacity to municipalities and the MISO transmission provider. Cleco also enters into transactions through MISO for spot energy sales which are transacted in the Day-Ahead Energy and Operating Reserves Market and the Real-Time Energy and Operating Reserves Market. The electricity revenue performance obligations, representing both energy and capacity, are satisfied as a series of performance obligations, and progress towards satisfaction of the performance obligations are measured using an output

method. The energy performance obligation measure of progress is based on kWh delivered. The capacity performance obligation measure of progress is based on time elapsed and will be recognized each month as Cleco’s generating units stand ready to deliver electricity to the customer. Cleco charges its wholesale customers market based rates that are subject to FERC’s triennial market power analysis. Cleco recognizes wholesale revenue, inclusive of both performance obligations, under the invoice practical expedient for the amount Cleco has the right to invoice.

Transmission Revenue

Transmission revenue is earned under a tariff with MISO. The performance obligation of transmission service is satisfied as service is provided. Revenue is recognized upon delivery of the transmission service. Cleco’s revenue from the transmission of electricity is recorded based on a FERC-approved annual formula rate mechanism. This mechanism provides for an annual filing of an estimated revenue requirement with rates effective January 1 of each year and a mechanism to true-up that estimate based on actual revenue requirements.

Other Revenue

Other revenue from contracts with customers, which is not a significant source of Cleco’s revenue, includes Teche Unit 3 SSR revenue, connection or other fees, and electric customer credits. The performance obligation under these contracts is satisfied and revenue is recognized as control of the products is delivered or services are rendered.

Revenue Unrelated to Contracts with Customers

Certain energy-related transactions, where Cleco records the change in value of those contracts, qualify as derivative contracts and are recorded pursuant to derivatives and hedging accounting guidance.

Disaggregated Revenue

Operating revenue, net for the three months ended March 31, 2018, was as follows:



	FOR THE THREE MONTHS ENDED MAR. 31, 2018
(THOUSANDS)	CLECO POWER		OTHER				ELIMINATIONS			TOTAL
Revenue from contracts with customers
Retail revenue
Residential ⁽¹⁾	$	91,390	$	—			$	—		$	91,390
Commercial ⁽¹⁾	66,695		—				—			66,695
Industrial ⁽¹⁾	37,386		—				—			37,386
Other retail ⁽¹⁾	3,801		—				—			3,801
Surcharge	5,238		—				—			5,238
Total retail revenue	$	204,510	$	—			$	—		$	204,510
Wholesale, net ⁽¹⁾	43,830		(2,420		)	⁽²⁾	—			41,410
Transmission	17,644		—				—			17,644
Other ⁽³⁾	43		1				—			44
Total revenue from contracts with customers	$	266,027	$	(2,419	)		$	—		$	263,608

Revenue unrelated to contracts with customers
Affiliate	$	208	$	15,669			$	(15,877	)	$	—
Other	13,152		—				—			13,152
Total revenue unrelated to contracts with customers	13,360		15,669				(15,877		)	13,152
Operating revenue, net	$	279,387	$	13,250			$	(15,877	)	$	276,760

⁽¹⁾ Includes fuel recovery revenue.

⁽²⁾ Amortization of intangible assets related to wholesale power supply agreements.

⁽³⁾ Other revenue from contracts with customers includes $3.2 million of Teche Unit 3 SSR revenue, net of $1.9 million of reserves for capital expenditures, and other miscellaneous fee revenue, partially offset by electric customer credits.



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

Transaction Price Allocated to Remaining Performance Obligations

For wholesale contracts that are greater than one year, the following table discloses (1) the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2018, and (2) when Cleco expects to recognize this revenue:



REMAINING PERFORMANCE OBLIGATIONS (THOUSANDS)
Nine months ending Dec. 31, 2018	$	7,721
Years ending Dec. 31,
2019	6,779
2020	7,068
2021	7,068
2022	6,468
Thereafter	10,210
Total wholesale contracts	$	45,314

Unsatisfied performance obligations primarily relate to stand-ready obligations as part of fixed capacity minimums.

Note 3 — Recent Authoritative Guidance

The Registrants adopted, or will adopt, the recent authoritative guidance listed below on their respective effective dates.

In February 2016, FASB amended the guidance to account for leases. This guidance is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The adoption of this guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes practical expedients that may be elected by entities. Management expects to elect the practical expedients which permit the Registrants to retain their current lease assessment and classifications for existing leases at the effective date and to not apply the new guidance to land easements that exist or expire before the effective date. Management is currently working through an adoption plan which includes the evaluation of lease contracts, new business processes, including changes to current recordkeeping systems, and the need for additional internal controls. Other than an expected increase in assets and liabilities, the full impact of the amended guidance has not been determined. Management will continue to evaluate the impact of this guidance, including any additional clarifying amendments issued during implementation. The amended guidance could have a material impact on the results of operations, financial condition, or cash flows of the Registrants.

In November 2016, FASB amended guidance for certain cash flow issues. The amended guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash. Therefore, amounts generally described as restricted cash and cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The adoption of this guidance was effective for fiscal years beginning after December 15, 2017, including interim periods within those years. This amendment was applied using a retrospective transition method to each period presented. This guidance impacted the presentation of

the cash flows statement, but did not have an impact on the results of operations or financial condition of the Registrants.

The following tables summarize the changes in the presentation of the Condensed Consolidated Statements of Cash Flows for Cleco and Cleco Power:



Cleco
	FOR THE THREE MONTHS ENDED MAR. 31, 2017
(THOUSANDS)	AS REPORTED			AS ADJUSTED
Transfer of cash from restricted accounts, net	$	8,790		$	—
Net cash used in investing activities	$	(38,112	)	$	(46,902	)
Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents	$	(1,558	)	$	(10,348	)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	$	23,077		$	69,571
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	21,519		$	59,223



Cleco Power
	FOR THE THREE MONTHS ENDED MAR. 31, 2017
(THOUSANDS)	AS REPORTED			AS ADJUSTED
Transfer of cash from restricted accounts, net	$	8,790		$	—
Net cash used in investing activities	$	(36,762	)	$	(45,552	)
Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents	$	(318	)	$	(9,108	)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	$	21,482		$	67,955
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	21,164		$	58,847

In March 2017, FASB amended guidance related to defined benefit pension and other postretirement benefit plans. The new amendment requires an entity to present service cost in the same line item as other current employee compensation costs and to present the remaining components of net benefit cost in a separate line item outside of operating items. The amendment also allows only the service cost component of net benefit cost to be eligible for capitalization within property, plant, and equipment. The non-service costs will continue to be capitalized and recovered from ratepayers as approved by FERC. Beginning January 1, 2018, the non-service costs capitalized for ratemaking purposes were reflected as a regulatory asset or liability for GAAP. The adoption of this guidance was effective for annual periods beginning after December 15, 2017, including interim periods within those years. This amendment was applied retrospectively for the presentation of the service cost in the income statement while the capitalization of the service cost was applied prospectively. This guidance did not have a significant impact on the results of operations, financial condition, or cash flows of the Registrants.



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

The following tables summarize the impact of this guidance on the Condensed Consolidated Statements of Income for Cleco and Cleco Power:



Cleco
	FOR THE THREE MONTHS ENDED MAR. 31, 2017
(THOUSANDS)	AS REPORTED			AS ADJUSTED
Other operations expenses	$	31,892		$	29,327		*
Total operating expenses	$	211,703		$	209,039
Operating income	$	38,798		$	41,462
Other expense	$	(274	)	$	(2,938	)
*Also reflects $0.1 million of Merger transaction and commitment costs that were reported in a separate line item in prior year.



Cleco Power
	FOR THE THREE MONTHS ENDED MAR. 31, 2017
(THOUSANDS)	AS REPORTED			AS ADJUSTED
Other operations expenses	$	31,988		$	30,264
Total operating expenses	$	209,002		$	207,278
Operating income	$	44,700		$	46,424
Other expense	$	(274	)	$	(1,998	)

In February 2018, FASB amended guidance that permits, but does not require, companies to reclassify stranded tax effects from the TCJA from AOCI to retained earnings. The adoption of this guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those years. Early adoption is permitted. Management is currently evaluating this guidance and the impact it may have on the results of operations, financial condition, or cash flows of the Registrants.

Note 4 — Regulatory Assets and Liabilities

Cleco capitalizes or defers certain costs for recovery from customers and recognizes a liability for amounts expected to be returned to customers based on regulatory approval and management’s ongoing assessment that it is probable these items will be recovered or refunded through the ratemaking process.

Under the current regulatory environment, Cleco believes these regulatory assets will be fully recoverable; however, if in the future, as a result of regulatory changes or competition, Cleco’s ability to recover these regulatory assets would no longer be probable, then to the extent that such regulatory assets were determined not to be recoverable, Cleco would be required to write-down such assets. In addition, potential deregulation of the industry or possible future changes in the method of rate regulation of Cleco could require discontinuance of the application of the authoritative guidance on regulated operations.

The following table summarizes Cleco Power’s regulatory assets and liabilities:



(THOUSANDS)	AT MAR. 31, 2018			AT DEC. 31, 2017
Regulatory liabilities - deferred taxes, net	$	(138,329	)	$	(140,426	)
Mining costs	3,186			3,823
Interest costs	4,410			4,499
AROs	2,689			2,762
Postretirement costs	139,822			142,764
Tree trimming costs	7,579			7,193
Training costs	6,513			6,552
Surcredits, net	1,195			2,173
AMI deferred revenue requirement	4,090			4,227
Emergency declarations	4,004			4,131
Production operations and maintenance expenses	7,226			8,625
AFUDC equity gross-up	71,245			71,205
Acadia Unit 1 acquisition costs	2,310			2,336
Financing costs	8,201			8,293
MISO integration costs	234			468
Coughlin transaction costs	961			968
Corporate franchise tax, net	—			153
MATS costs	1,282			2,564
Non-service cost of postretirement benefits	1,037			—
Other	255			484
Total regulatory assets	266,239			273,220
Corporate franchise tax, net	(169		)	—
Accumulated deferred fuel	23,053			13,980
Total regulatory assets, net	$	150,794		$	146,774

The following table summarizes Cleco’s net regulatory assets and liabilities:



(THOUSANDS)	AT MAR. 31, 2018		AT DEC. 31, 2017
Total Cleco Power regulatory assets, net	$	150,794	$	146,774
Cleco Merger adjustments ⁽¹⁾
Fair value of long-term debt	145,033		147,145
Postretirement costs	20,878		21,375
Financing costs	8,536		8,623
Debt issuance costs	6,562		6,665
Total Cleco regulatory assets, net	$	331,803	$	330,582

⁽¹⁾ Cleco regulatory assets include acquisition accounting adjustments as a result of the Merger.

Non-service Cost of Postretirement Benefits

On January 1, 2018, FASB’s amended guidance related to defined benefit pension and other postretirement plans became effective. The amendment allows only the service cost component of net benefit cost to be eligible for capitalization within property, plant, and equipment. The non-service costs will continue to be capitalized and recovered from ratepayers as approved by FERC . Beginning January 1, 2018, the non-service cost previously eligible for capitalization into property, plant, and equipment will be deferred to a regulatory asset and amortized over the estimated lives of the respective assets. For more information on FASB’s guidance related to defined benefit pension and other postretirement plans, see Note 3 — “Recent Authoritative Guidance.”

Note 5 — Fair Value Accounting

The amounts reflected on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets at March 31, 2018 , and December 31, 2017 , for cash equivalents, restricted cash equivalents, accounts receivable, other accounts receivable, short-term debt, and accounts payable approximate fair value



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

because of their short-term nature. Cleco applies the provisions of the fair value measurement standard to its non-recurring, non-financial measurements including business combinations as well as impairment related to goodwill and other long-lived assets.

The following tables summarize the carrying value and estimated market value of Cleco and Cleco Power’s financial instruments not measured at fair value on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets:



Cleco
	AT MAR. 31, 2018				AT DEC. 31, 2017
(THOUSANDS)	CARRYING VALUE*		FAIR VALUE		CARRYING VALUE*		FAIR VALUE
Long-term debt	$	2,905,222	$	2,924,772	$	2,866,955	$	2,921,325

* The carrying value of long-term debt does not include deferred issuance costs of $11.3 million and $11.6 million at March 31, 2018 , and December 31, 2017 , respectively.



Cleco Power
	AT MAR. 31, 2018				AT DEC. 31, 2017
(THOUSANDS)	CARRYING VALUE*		FAIR VALUE		CARRYING VALUE*		FAIR VALUE
Long-term debt	$	1,410,188	$	1,555,341	$	1,369,810	$	1,535,234

* The carrying value of long-term debt does not include deferred issuance costs of $8.9 million and $9.1 million at March 31, 2018 , and December 31, 2017 , respectively.

Fair Value Measurements and Disclosures

Cleco classifies assets and liabilities that are measured at their fair value according to three different levels depending on the inputs used in determining fair value.

The following tables disclose for Cleco and Cleco Power the fair value of financial assets and liabilities measured on a recurring basis:



Cleco
	CLECO CONSOLIDATED FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS)	AT MAR. 31, 2018		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2017		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset description
Institutional money market funds	$	198,446	$	—	$	198,446	$	—	$	144,302	$	—	$	144,302	$	—
FTRs	4,828		—		—		4,828		7,396		—		—		7,396
Total assets	$	203,274	$	—	$	198,446	$	4,828	$	151,698	$	—	$	144,302	$	7,396
Liability description
FTRs	$	545	$	—	$	—	$	545	$	352	$	—	$	—	$	352
Total liabilities	$	545	$	—	$	—	$	545	$	352	$	—	$	—	$	352



Cleco Power
	CLECO POWER FAIR VALUE MEASUREMENTS AT REPORTING DATE
(THOUSANDS)	AT MAR. 31, 2018		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		AT DEC. 31, 2017		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset description
Institutional money market funds	$	151,225	$	—	$	151,225	$	—	$	95,681	$	—	$	95,681	$	—
FTRs	4,828		—		—		4,828		7,396		—		—		7,396
Total assets	$	156,053	$	—	$	151,225	$	4,828	$	103,077	$	—	$	95,681	$	7,396
Liability description
FTRs	$	545	$	—	$	—	$	545	$	352	$	—	$	—	$	352
Total liabilities	$	545	$	—	$	—	$	545	$	352	$	—	$	—	$	352

The following table summarizes the net changes in the net fair value of FTR assets and liabilities classified as Level 3 in the fair value hierarchy for Cleco and Cleco Power:



	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2018			2017
Beginning balance	$	7,044		$	7,683
Unrealized gains*	1,617			2,104
Purchases	371			275
Settlements	(4,749		)	(5,644		)
Ending balance	$	4,283		$	4,418
* Unrealized gains and losses are reported through Accumulated deferred fuel on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets.



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

The following table quantifies the significant unobservable inputs used in developing the fair value of Level 3 positions as of March 31, 2018 , and December 31, 2017 :



	FAIR VALUE				VALUATION TECHNIQUE	SIGNIFICANT UNOBSERVABLE INPUTS	FORWARD PRICE RANGE
(THOUSANDS, EXCEPT FORWARD PRICE RANGE)	ASSETS		LIABILITIES				LOW			HIGH
FTRs at Mar. 31, 2018	$	4,828	$	545	RTO auction pricing	FTR price - per MWh	$	(7.21	)	$	7.21
FTRs at Dec. 31, 2017	$	7,396	$	352	RTO auction pricing	FTR price - per MWh	$	(2.95	)	$	6.33

Cleco utilizes different valuation techniques for fair value calculations. In order to measure the fair value for Level 1 assets and liabilities, Cleco obtains the closing price from published indices in active markets for the various instruments and multiplies this price by the appropriate number of instruments held. Cleco’s Level 2 fair values are determined by obtaining the closing price of similar assets and liabilities from published indices in active markets and then discounting the price to the current period using a U.S. Treasury published interest rate as a proxy for a risk-free rate of return. Level 3 fair values occur in situations in which there is little, if any, market activity for the asset or liability at the measurement date. Cleco’s Level 3 assets and liabilities are valued using RTO auction prices. Cleco has consistently applied the Level 2 and Level 3 fair value techniques from fiscal period to fiscal period. Significant increases or decreases in any of those inputs in isolation would result in a significantly different fair value measurement.

The assets and liabilities reported at fair value are grouped into classes based on the underlying nature and risks associated with the individual asset or liability.

At March 31, 2018 , Cleco and Cleco Power were exposed to concentrations of credit risk through their short-term investments classified as cash equivalents and restricted cash equivalents. The institutional money market funds were reported on Cleco’s Condensed Consolidated Balance Sheets in cash and cash equivalents, current restricted cash and cash equivalents, and non-current restricted cash and cash equivalents of $172.5 million , $6.7 million , and $19.2 million , respectively, at March 31, 2018 , and $111.1 million , $13.1 million , and $20.1 million , respectively, at December 31, 2017 . At Cleco Power, the institutional money market funds were reported on Cleco Power’s Condensed Consolidated Balance Sheets in cash and cash equivalents, current restricted cash and cash equivalents, and non-current restricted cash and cash equivalents of $125.3 million , $6.7 million , and $19.2 million , respectively, at March 31, 2018 , and $62.5 million , $13.1 million , and $20.1 million , respectively, at December 31, 2017 . If the money market funds failed to perform under the terms of the investments, Cleco and Cleco Power would be exposed to a loss of the invested amounts. Collateral on these types of investments is not required by Cleco or Cleco Power. The Level 2 institutional money market funds asset consists of a single class. In order to capture interest income and minimize risk, cash is invested in money market funds that invest primarily in short-term securities issued by the U.S. Treasury to maintain liquidity and achieve the goal of a net asset value of a dollar. The risks associated with this class are counterparty risk of the fund manager and risk of price volatility associated with the underlying securities of the fund.

Cleco Power’s FTRs were priced using MISO’s monthly auction prices. Forward seasonal periods are not included in

every monthly auction; therefore, the average of the most recent seasonal auction prices is used for monthly valuation. FTRs are categorized as Level 3 fair value measurements because the only relevant pricing available comes from MISO auctions, which occur monthly in the Multi-Period Monthly Auction.

During the three months ended March 31, 2018 , and the year ended December 31, 2017 , Cleco did no t experience any transfers between levels within the fair value hierarchy.

Commodity Contracts

The following table presents the fair values of derivative instruments and their respective line items as recorded on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets at March 31, 2018 , and December 31, 2017 :



	DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
(THOUSANDS)	BALANCE SHEET LINE ITEM	AT MAR. 31, 2018		AT DEC. 31, 2017
Commodity-related contracts
FTRs
Current	Energy risk management assets	$	4,828	$	7,396
Current	Other current liabilities	545		352
Commodity-related contracts, net		$	4,283	$	7,044

The following table presents the effect of derivatives not designated as hedging instruments on Cleco and Cleco Power’s Condensed Consolidated Statements of Income for the three months ended March 31, 2018 , and 2017 :



	AMOUNT OF GAIN(LOSS) RECOGNIZED IN INCOME ON DERIVATIVES
		FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	DERIVATIVES LINE ITEM	2018			2017
Commodity contracts
FTRs ⁽¹⁾	Electric operations	$	18,150		$	9,163
FTRs ⁽¹⁾	Power purchased for utility customers	(5,667		)	(4,665		)
Total		$	12,483		$	4,498

⁽¹⁾ For the three months ended March 31, 2018 , and 2017, unrealized gains associated with FTRs of $1.6 million and $2.1 million , respectively, were reported through Accumulated deferred fuel on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets.

The total volume of FTRs that Cleco Power had outstanding at March 31, 2018 , and December 31, 2017 , was 3.8 million MWh and 9.0 million MWh, respectively.

Note 6 — Debt



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

interest rate of 3.08% , with final maturity dates of December 16, 2022, and 2023, respectively. The second tranche was issued on March 26, 2018, with principal amounts of $50.0 million at an interest rate of 3.17% , with a final maturity date of December 16, 2024. The proceeds from the issuance and sale were used for capital investments and general utility purposes.

On February 6, 2018, Cleco Power entered into a debt commitment letter in connection with the Purchase and Sale Agreement. For more information on the debt commitment letter, see Note 16 — “Plan of Acquisition.”

Note 7 — Pension Plan and Employee Benefits

Pension Plan and Other Benefits Plan

Employees hired before August 1, 2007, are covered by a non-contributory, defined benefit pension plan. Benefits under the plan reflect an employee’s years of service, age at retirement, and highest total average compensation for any consecutive five calendar years during the last ten years of employment with Cleco. Cleco’s policy is to base its contributions to the employee pension plan upon actuarial computations utilizing the projected unit credit method, subject to the IRS’s full

funding limitation. Cleco did not make any required or discretionary contributions to the pension plan in 2017 and does not expect to make any in 2018. The required contributions are driven by liability funding target percentages set by law which could cause the required contributions to be uneven among the years. The ultimate amount and timing of the contributions may be affected by changes in the discount rate, changes in the funding regulations, and actual returns on fund assets. Cleco Power is considered the plan sponsor and Support Group is considered the plan administrator.

Cleco’s retirees may be eligible to receive Other Benefits. Dependents of Cleco’s retirees may also be eligible to receive Other Benefits with the exception of life insurance benefits. Cleco recognizes expected costs of Other Benefits during the periods in which the benefits are earned.

The non-service components of net periodic pension and Other Benefits cost are included in Other expense within Cleco and Cleco Power’s Condensed Consolidated Statements of Income. Net periodic pension and Other Benefits cost for the three months ended March 31, 2018 , and 2017 were as follows:



	PENSION BENEFITS						OTHER BENEFITS
	FOR THE THREE MONTHS ENDED MAR. 31,						FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2018			2017			2018		2017
Components of periodic benefit costs
Service cost	$	2,393		$	2,225		$	338	$	385
Interest cost	5,183			5,358			357		403
Expected return on plan assets	(5,938		)	(6,138		)	—		—
Amortizations
Prior period service credit	(18		)	(18		)	—		—
Net loss (gain)	2,960			2,413			5		(3		)
Net periodic benefit cost	$	4,580		$	3,840		$	700	$	785

Because Cleco Power is the pension plan sponsor and the related trust holds the assets, the net unfunded status of the pension plan is reflected at Cleco Power. The liability of Cleco’s other subsidiaries is transferred with a like amount of assets to Cleco Power monthly. The expense of the pension plan related to Cleco’s other subsidiaries for the three months ended March 31, 2018 , and 2017 , was $0.5 million and $0.4 million , respectively.

Cleco Holdings is the plan sponsor for the Other Benefits plans. There are no assets set aside in a trust and the liabilities are reported on the individual subsidiaries’ financial statements. The expense related to Other Benefits reflected in Cleco Power’s Condensed Consolidated Statements of Income for the three months ended March 31, 2018 , and 2017, was $0.8 million and $0.9 million , respectively. The current and non-current portions of the Other Benefits liability for Cleco and Cleco Power at March 31, 2018 , and December 31, 2017 , were as follows:



Cleco
(THOUSANDS)	AT MAR. 31, 2018		AT DEC. 31, 2017
Current	$	4,061	$	4,061
Non-current	$	38,684	$	39,142



Cleco Power
(THOUSANDS)	AT MAR. 31, 2018		AT DEC. 31, 2017
Current	$	3,525	$	3,525
Non-current	$	33,648	$	34,033

SERP

Certain Cleco officers are covered by SERP. In 2014, SERP was closed to new participants; however, with regard to current SERP participants, including former employees or their beneficiaries, all terms of SERP will continue, other than as described below. SERP is a non-qualified, non-contributory, defined benefit pension plan. Generally, benefits under the plan reflect an employee’s years of service, age at retirement and the sum of (a) the highest base salary paid out over the last five calendar years and (b) the average of the three highest cash bonuses paid during the 60 months prior to retirement. SERP benefits are reduced by retirement benefits received from any other defined benefit pension plan, supplemental executive retirement plan, or Cleco contributions under the enhanced 401(k) Plan to the extent such contributions exceed the amount the employee would have received under the terms of the original 401(k) Plan. In accordance with the SERP plan document and the Merger Agreement, four executive officers received enhanced benefits, and upon termination of employment, two of these executive officers received accelerated vesting. Another executive officer received enhanced SERP benefits, net of other postretirement benefits, as part of a separation agreement. Two executive officers’ SERP benefits were capped as of December 31, 2017, with regard to final compensation; however, adjustments will continue with regard to age and tenure with Cleco. Additionally, these executive officers had their annual bonuses set at target rather than



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

actual awards for the years 2016 and 2017 for the average incentive award portion of their SERP benefit calculation. A third executive officer’s SERP benefit amount will be set at a specified amount based upon the year of separation. Management will review current market trends as it evaluates Cleco’s future compensation strategy.

Cleco does not fund the SERP liability, but instead pays for current benefits out of the general funds available. Cleco Power has formed a rabbi trust. The life insurance policies issued on SERP participants designate the rabbi trust as the beneficiary. Market conditions could have a significant impact on the cash surrender value of the life insurance policies. Proceeds from the life insurance policies are expected to be used to pay the SERP participants’ death benefits, as well as future SERP payments. However, because SERP is a non-qualified plan, the assets of the trust could be used to satisfy general creditors of Cleco Power in the event of insolvency. All SERP benefits are paid out of the general cash available of the respective companies that employed the officer. Cleco Power is considered the plan sponsor and Support Group is considered the plan administrator.

The non-service components of net periodic benefit cost related to SERP are included in Other expense within Cleco and Cleco Power’s Condensed Consolidated Statements of Income. Net periodic benefit cost related to SERP for the three months ended March 31, 2018 , and 2017 , were as follows:



	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2018			2017
Components of periodic benefit costs
Service cost	$	105		$	145
Interest cost	760			800
Amortizations
Prior period service credit	(35		)	(57		)
Net loss	585			419
Net periodic benefit cost	1,415			1,307
Special/contractual termination benefits	—			315
Total benefit cost	$	1,415		$	1,622

There was a remeasurement of SERP on March 30, 2017, to reflect a special termination benefit resulting from an executive officer’s separation agreement. On the date of the remeasurement, the discount rate decreased from 4.22% to 4.08% . This remeasurement resulted in a special termination benefit for the executive officer of $0.3 million .

The total expense related to SERP reflected on Cleco Power’s Condensed Consolidated Statements of Income was $0.3 million for both the three months ended March 31, 2018 , and 2017 .

Liabilities relating to SERP are reported on the individual subsidiaries’ financial statements. The current and non-current portions of the SERP liability for Cleco and Cleco Power at March 31, 2018 , and December 31, 2017 , were as follows:



Cleco
(THOUSANDS)	AT MAR. 31, 2018		AT DEC. 31, 2017
Current	$	4,471	$	4,471
Non-current	$	79,637	$	79,868



Cleco Power
(THOUSANDS)	AT MAR. 31, 2018		AT DEC. 31, 2017
Current	$	929	$	929
Non-current	$	16,560	$	16,589

401(k) Plan

Cleco’s 401(k) Plan is intended to provide active, eligible employees with voluntary, long-term savings and investment opportunities. The 401(k) Plan is a defined contribution plan and is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974. In accordance with the 401(k) Plan, employer contributions are made in the form of cash. Cash contributions are invested in proportion to the participant’s voluntary contribution investment choices. Participation in the 401(k) Plan is voluntary, and all active Cleco employees are eligible to participate. Cleco’s 401(k) Plan expense for the three months ended March 31, 2018 , and 2017 , was as follows:



	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2018		2017
401(k) Plan expense	$	2,063	$	1,668

Cleco Power is the plan sponsor for the 401(k) Plan. The expense of the 401(k) Plan related to Cleco’s other subsidiaries for the three months ended March 31, 2018 , and 2017 , was as follows:



	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2018		2017
401(k) Plan expense	$	402	$	279

Note 8 — Income Taxes

Effective Tax Rates

The following tables summarize the effective income tax rates for Cleco and Cleco Power for the three months ended March 31, 2018 , and 2017 :



Cleco
	FOR THE THREE MONTHS ENDED MAR. 31,
	2018		2017
Effective tax rate	20.9	%	33.1	%



Cleco Power
	FOR THE THREE MONTHS ENDED MAR. 31,
	2018		2017
Effective tax rate	23.5	%	35.6	%

For the three months ended March 31, 2018 , and 2017 , the effective income tax rates for both Cleco and Cleco Power were different than the federal statutory rate primarily due to permanent tax differences, the flowthrough of state tax benefits, including AFUDC equity, and state tax expense.

Uncertain Tax Positions

Cleco classifies all interest related to uncertain tax positions as a component of interest payable and interest expense. At March 31, 2018 , and December 31, 2017 , Cleco and Cleco Power had no interest payable related to uncertain tax positions. For the three months ended March 31, 2018 , and 2017 , Cleco and Cleco Power had no interest expense related to uncertain tax positions.

At March 31, 2018 , Cleco had no liability for uncertain tax positions. Cleco estimates that it is reasonably possible that the balance of unrecognized tax benefits as of March 31, 2018 , for Cleco and Cleco Power would be unchanged in the



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

next 12 months. The settlement of open tax years could involve the payment of additional taxes, and/or the recognition of tax benefits, which may have an effect on Cleco’s effective tax rate.

The federal income tax years that remain subject to examination by the IRS are 2014, 2015, and 2016.

Beginning with the 2013 tax year, Cleco entered into the IRS’s Compliance Assurance Process which allows taxpayers to work collaboratively with an IRS team to identify and resolve potential tax issues before the federal tax return is filed each year. Cleco must apply for admission to the program each year. Cleco has been approved for the Compliance Assurance Process through the 2018 tax year.

The state income tax years that remain subject to examination by the Louisiana Department of Revenue are 2014, 2015, and 2016.

Cleco classifies income tax penalties as a component of other expense. For the three months ended March 31, 2018 , and 2017 , no penalties were recognized.

2017 Tax Reform

On December 22, 2017, the President signed into law the TCJA. The TCJA includes significant changes to the Internal Revenue Code, as amended, including amendments which significantly change the taxation of business entities and includes specific provisions related to rate regulated activities, including Cleco Power. The most significant change that impacts Cleco is the reduction in the corporate federal income tax rate from 35% to 21% .

The SEC Staff has recognized the complexity of reflecting the impacts of the TCJA and issued guidance which clarifies accounting for income taxes if information is not yet available or complete and provides up to one year to complete the required analysis and accounting (the measurement period).

The Registrants have made a reasonable estimate for the measurement and accounting of certain effects of the TCJA, which were reflected in the December 31, 2017, financial statements. The accounting for these provisional items decreased deferred income tax expense for Cleco and Cleco Power by $46.3 million and $14.3 million , respectively, for the year ended December 31, 2017. The TCJA also resulted in a decrease in the accumulated deferred income tax liability for Cleco and Cleco Power by $394.9 million and $362.9 million , respectively, at December 31, 2017. For the three months ended March 31, 2018 , there were no adjustments in the accumulated deferred income tax liability related to the TCJA for Cleco or Cleco Power.

The impacts of the TCJA discussed above, including the effects on income tax expense, regulatory liabilities, and effects on future periods, are provisional and subject to

change. The accounting is not complete due to the timing of the final passage of the TCJA, the complexity of the TCJA, the complexity of remeasuring ADIT, and the uncertainty of regulatory treatment. Additional analysis of the TCJA, the inventory of items that give rise to temporary differences, and additional analysis of items requiring normalization is required before accounting for the TCJA is considered complete under the authoritative guidance for income taxes. Cleco expects any final adjustments to the provisional amounts to be recorded by the fourth quarter of 2018, which could have a material adverse effect on the results of operations of Cleco.

Note 9 — Disclosures about Segments

Cleco’s reportable segment is based on its method of internal reporting, which disaggregates business units by its first-tier subsidiary.

Cleco Power, the reportable segment, engages in business activities from which it earns revenue and incurs expenses. Segment managers report periodically to Cleco’s CEO with discrete financial information and, at least quarterly, present discrete financial information to Cleco and Cleco Power’s Boards of Managers. The reportable segment prepares budgets that are presented to and approved by Cleco and Cleco Power’s Boards of Managers. The column shown as Other in the chart below includes the holding company, a shared services subsidiary, two transmission interconnection facility subsidiaries, an investment subsidiary, and a subsidiary formed to facilitate the Purchase and Sale Agreement with NRG Energy and NRG South Central. On December 29, 2017, Cleco sold the transmission assets owned by Attala and Perryville, the two subsidiaries that owned and operated the transmission interconnection facilities. After December 29, 2017, the remaining operations of Attala and Perryville were minimal. On February 6, 2018, Cleco Cajun entered into the Purchase and Sale Agreement with NRG Energy and NRG South Central. Upon the expected closing of the transaction, Cleco anticipates Cleco Cajun will be a new reportable segment. For more information on the Purchase and Sale Agreement and related transactions, see Note 16 — “Plan of Acquisition.”

The financial results in the table below are presented on an accrual basis. Management evaluates the performance of its segment and allocates resources to it based on segment profit and the requirements to implement new strategic initiatives and projects to meet current business objectives. Material intercompany transactions occur on a regular basis. These intercompany transactions relate primarily to joint and common administrative support services.



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q



SEGMENT INFORMATION FOR THE THREE MONTHS ENDED MAR. 31,
2018 (THOUSANDS)	CLECO POWER			OTHER			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	264,631		$	(2,420	)	$	—		$	262,211
Other operations	22,195			1			—			22,196
Electric customer credits	(7,647		)	—			—			(7,647		)
Affiliate revenue	208			15,669			(15,877		)	—
Operating revenue, net	$	279,387		$	13,250		$	(15,877	)	$	276,760
Depreciation and amortization	$	40,388		$	2,119		$	—		$	42,507
Interest charges	$	17,656		$	13,549		$	(48	)	$	31,157
Interest income	$	641		$	190		$	(48	)	$	783
Federal and state income tax expense (benefit)	$	7,997		$	(5,135	)	$	—		$	2,862
Net income (loss)	$	26,004		$	(15,142	)	$	(1	)	$	10,861
Additions to property, plant, and equipment	$	63,343		$	790		$	—		$	64,133
Equity investment in investees	$	18,172		$	—		$	—		$	18,172
Goodwill	$	1,490,797		$	—		$	—		$	1,490,797
Total segment assets	$	5,722,284		$	618,513		$	(30,816	)	$	6,309,981



2017 (THOUSANDS)	CLECO POWER			OTHER			ELIMINATIONS			CONSOLIDATED
Revenue
Electric operations	$	237,553		$	(3,497	)	$	—		$	234,056
Other operations	16,365			515			—			16,880
Electric customer credits	(435		)	—			—			(435		)
Affiliate revenue	219			14,734			(14,953		)	—
Operating revenue, net	$	253,702		$	11,752		$	(14,953	)	$	250,501
Depreciation and amortization	$	38,758		$	2,093		$	—		$	40,851
Interest charges	$	18,104		$	13,681		$	(67	)	$	31,718
Interest income	$	266		$	113		$	(67	)	$	312
Federal and state income tax expense (benefit)	$	9,855		$	(6,748	)	$	—		$	3,107
Net income (loss)	$	17,854		$	(11,562	)	$	—		$	6,292
Additions to property, plant, and equipment	$	46,744		$	1,146		$	—		$	47,890
Equity investment in investees ⁽¹⁾	$	18,172		$	—		$	—		$	18,172
Goodwill ⁽¹⁾	$	1,490,797		$	—		$	—		$	1,490,797
Total segment assets ⁽¹⁾	$	5,679,538		$	619,943		$	(21,099	)	$	6,278,382
⁽¹⁾ Balances as of December 31, 2017

Note 10 — Regulation and Rates

Transmission ROE

For more information on the ROE complaints, see Note 12 — “Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — Transmission ROE.”

FRP

Cleco Power’s annual retail earnings are subject to an FRP that was approved by the LPSC in June 2014. Under the terms of the FRP, Cleco Power is allowed to earn a target ROE of 10.0% , while providing the opportunity to earn up to 10.9% . Additionally, 60.0% of retail earnings between 10.9% and 11.75% and all retail earnings over 11.75% are required to be refunded to customers. The amount of credits due to customers, if any, is determined by Cleco Power and the LPSC annually. Credits are typically included on customers’ bills the following summer, but the amount and timing of the refunds is ultimately subject to LPSC approval. Cleco Power will file an

application with the LPSC for a new FRP by June 30, 2019, with anticipated new rates being effective July 1, 2020.

Cleco Power must file annual monitoring reports no later than October 31 for the 12-month period ended June 30. On October 31, 2017, Cleco Power filed its monitoring report for the 12-month period ended June 30, 2017, which indicated that no refund was due as a result of the FRP and $1.2 million was due as a result of the cost of service savings from the Merger Commitments. On March 5, 2018, Cleco Power responded to two sets of data requests from the LPSC for the 2017 monitoring report. On April 24, 2018, Cleco Power responded to a third set of data requests for the 2017 monitoring report. As of March 31, 2018, Cleco Power had $2.1 million accrued for the cost of service savings refund.

SSR

In September 2016, Cleco Power filed an Attachment Y with MISO requesting retirement of Teche Unit 3 effective April 1, 2017. MISO conducted a study which determined the proposed retirement of Teche Unit 3 would result in violations of specific applicable reliability standards for which no mitigation is available. As a result, MISO designated Teche Unit 3 as an SSR unit until such time that an appropriate alternative solution can be implemented to mitigate reliability issues. One mitigating factor that has been identified is Cleco Power’s Terrebonne to Bayou Vista Transmission project, which



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is expected to be complete by the first quarter of 2019. In the second quarter of 2017, MISO began allocating SSR costs to the load serving entities that require the operation of the SSR unit for reliability purposes, including Cleco Power. Cleco Power had a 12-month SSR agreement for the period April 1, 2017, to March 31, 2018. In January 2018, another study was performed by MISO, and it was determined that an SSR agreement will be needed for the period April 1, 2018, until the sooner of the in-service date of the Terrebonne to Bayou Vista Transmission project or March 31, 2019. During this time, Cleco Power will continue to operate Teche Unit 3. Cleco Power filed with FERC for its approval to collect $20.3 million and $11.8 million annually in SSR payments from MISO for the first and second SSR agreements, respectively. The SSR payments include recovering operations and maintenance expenses, administrative and general expenses, taxes, depreciation, capital expenditures, and carrying charges, all of which are related to Teche Unit 3 for the period of the SSR agreements. At the end of the SSR period, when Teche Unit 3 is retired, any SSR payments received from MISO for capital expenditures paid by third parties will be credited to property, plant, and equipment. As of March 31, 2018, Cleco Power had $4.3 million accrued for SSR payments received for capital expenditures related to Teche Unit 3. In the second quarter of 2017, Cleco Power began receiving the monthly SSR payments from MISO, subject to refund pending review and approval by FERC. On July 20, 2017, Cleco Power, FERC staff, and intervenors met at the first settlement conference and set a procedural schedule for data requests between parties. On July 27, 2017, Cleco Power received five sets of informal data requests from FERC staff and intervenors. The second settlement conference was held on February 22, 2018; however, a settlement was not reached. Cleco Power is unable to determine when a binding FERC order will be issued. At the end of the SSR agreement, Cleco Power will have the option to rescind the Attachment Y requesting retirement of Teche Unit 3. If this option is exercised, Cleco Power may be required to refund recoverable capital expenditures plus interest. Management does not expect to be required to refund any portion of these costs.

TCJA

On February 21, 2018, the LPSC directed utilities, including Cleco Power, to provide considerations of the appropriate manner to flowthrough to ratepayers the benefits of the reduction in corporate income taxes as a result of the TCJA. Cleco Power filed comments with the LPSC on March 12, 2018, which included among other things, a refund to customers for the differences in the cumulative federal and state income tax rate of 38% prior to the TCJA, versus the 26% cumulative federal and state income tax rate effective after the TCJA. As a result, Cleco Power began accruing an estimated reserve for the change in the tax rate beginning January 1, 2018, and will continue through June 30, 2018. Cleco Power recommended refunding this amount to customers on September 2018 bills based on July 2018 usage, pending LPSC review and approval. At March 31, 2018, Cleco Power had $7.3 million accrued for the estimated federal tax-related benefits from the TCJA. For the period July 1, 2018, to June 30, 2019, Cleco Power has proposed that its annual FRP filing reflect the change in the tax rate.

Note 11 — Variable Interest Entities

Cleco and Cleco Power apply the equity method of accounting to report the investment in Oxbow in the consolidated financial statements. Under the equity method, the assets and liabilities of this entity are reported as Equity investment in investee on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets. The revenue and expenses (excluding income taxes) of this entity are netted and reported as equity income or loss from investees on Cleco and Cleco Power’s Condensed Consolidated Statements of Income.

Oxbow is owned 50% by Cleco Power and 50% by SWEPCO. Cleco Power is not the primary beneficiary because it shares the power to control Oxbow’s significant activities with SWEPCO. Cleco Power’s current assessment of its maximum exposure to loss related to Oxbow at March 31, 2018 , consisted of its equity investment of $18.2 million .

The following table presents the components of Cleco Power’s equity investment in Oxbow:



INCEPTION TO DATE (THOUSANDS)	AT MAR. 31, 2018			AT DEC. 31, 2017
Purchase price	$	12,873		$	12,873
Cash contributions	6,399			6,399
Dividends	(1,100		)	(1,100		)
Total equity investment in investee	$	18,172		$	18,172

The following table compares the carrying amount of Oxbow’s assets and liabilities with Cleco Power’s maximum exposure to loss related to its investment in Oxbow:



(THOUSANDS)	AT MAR. 31, 2018		AT DEC. 31, 2017
Oxbow’s net assets/liabilities	$	36,345	$	36,345
Cleco Power’s 50% equity	$	18,172	$	18,172
Cleco Power’s maximum exposure to loss	$	18,172	$	18,172

The following table contains summarized financial information for Oxbow:



	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2018		2017
Operating revenue	$	863	$	1,073
Operating expenses	863		1,073
Income before taxes	$	—	$	—

DHLC mines lignite reserves at Oxbow through the Amended Lignite Mining Agreement. The lignite reserves are intended to be used to provide fuel to the Dolet Hills Power Station.

Oxbow has no third-party agreements, guarantees, or other third-party commitments that contain obligations affecting Cleco Power’s investment in Oxbow.



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Note 12 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees

Litigation

Devil’s Swamp

In October 2007, Cleco received a Special Notice for Remedial Investigation and Feasibility Study (RI/FS) from the EPA pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (also known as the Superfund statute) for a facility known as the Devil’s Swamp Lake site located just northwest of Baton Rouge, Louisiana. The special notice requested that Cleco and Cleco Power, along with many other listed potentially responsible parties (PRP), enter into negotiations with the EPA for the performance of an RI/FS at the Devil’s Swamp Lake site. The EPA identified Cleco as one of many companies that sent PCB wastes for disposal to the site. The EPA proposed to add the Devil’s Swamp Lake site to the National Priorities List on March 8, 2004, based on the release of PCBs to fisheries and wetlands located on the site, but no final listing decision has yet been made. The PRPs began discussing a potential proposal to the EPA in February 2008. The EPA issued a Unilateral Administrative Order to two PRPs, Clean Harbors, Inc. and Baton Rouge Disposal, to conduct an RI/FS in December 2009. The Tier 1 part of the study was completed in June 2012. Field activities for the Tier 2 investigation were completed in July 2012. The draft Tier 2 remedial investigation report was submitted in December 2014. In 2015, remedial investigation activities included the collection and analysis of sediment, crawfish, and fish tissue samples. After reviewing the sample analysis, in August 2015, the Louisiana Department of Health and Hospitals updated the advisory for the area to advise that fish and crawfish from the area should not be eaten. The final Tier 2 remedial investigation report was made public in December 2015. Currently, the study/remedy selection task continues, and there is no record of a decision. Therefore, management is unable to determine how significant Cleco’s share of the costs associated with the RI/FS and possible response action at the site, if any, may be and whether this will have a material impact on the results of operations, financial condition, or cash flows of the Registrants.

Merger

In connection with the Merger, four actions were filed in the Ninth Judicial District Court for Rapides Parish, Louisiana and three actions were filed in the Civil District Court for Orleans Parish, Louisiana. The petitions in each action generally alleged, among other things, that the members of Cleco Corporation’s Board of Directors breached their fiduciary duties by, among other things, conducting an allegedly inadequate sale process, agreeing to the Merger at a price that allegedly undervalued Cleco, and failing to disclose material information about the Merger. The petitions also alleged that Cleco Partners, Cleco Corporation, Merger Sub, and in some cases, certain of the investors in Cleco Partners, either aided and abetted or entered into a civil conspiracy to advance those supposed breaches of duty. The petitions seek various remedies, including monetary damages, which includes attorneys’ fees and expenses.

The four actions filed in the Ninth Judicial District Court for Rapides Parish are captioned as follows:


•	Braunstein v. Cleco Corporation , No. 251,383B (filed October 27, 2014),


•	Moore v. Macquarie Infrastructure and Real Assets , No. 251,417C (filed October 30, 2014),


•	Trahan v. Williamson , No. 251,456C (filed November 5, 2014), and


•	L’Herisson v. Macquarie Infrastructure and Real Assets , No. 251,515F (filed November 14, 2014).

In November 2014, the plaintiff in the Braunstein action moved for a dismissal of the action without prejudice, and that motion was granted in November 2014. In December 2014, the Court consolidated the remaining three actions and appointed interim co-lead counsel. Also in December 2014, the plaintiffs in the consolidated action filed a Consolidated Amended Verified Derivative and Class Action Petition for Damages and Preliminary and Permanent Injunction (the Consolidated Amended Petition). The consolidated action named Cleco Corporation, its directors, Cleco Partners, and Merger Sub as defendants. The Consolidated Amended Petition alleged, among other things, that Cleco Corporation’s directors breached their fiduciary duties to Cleco’s shareholders and grossly mismanaged Cleco by approving the Merger Agreement because it allegedly did not value Cleco adequately, failing to structure a process through which shareholder value would be maximized, engaging in self-dealing by ignoring conflicts of interest, and failing to disclose material information about the Merger. The Consolidated Amended Petition further alleged that all defendants conspired to commit the breaches of fiduciary duty. Cleco believes that the allegations of the Consolidated Amended Petition are without merit and that it has substantial meritorious defenses to the claims set forth in the Consolidated Amended Petition.

The three actions filed in the Civil District Court for Orleans Parish are captioned as follows:


•	Butler v. Cleco Corporation , No. 2014-10776 (filed November 7, 2014),


•	Creative Life Services, Inc. v. Cleco Corporation , No. 2014-11098 (filed November 19, 2014), and


•	Cashen v. Cleco Corporation , No. 2014-11236 (filed November 21, 2014).

Both the Butler and Cashen actions name Cleco Corporation, its directors, Cleco Partners, Merger Sub, MIRA, bcIMC, and John Hancock Financial as defendants. The Creative Life Services action names Cleco Corporation, its directors, Cleco Partners, Merger Sub, MIRA, and Macquarie Infrastructure Partners III, L.P., as defendants. In December 2014, the plaintiff in the Butler action filed an Amended Class Action Petition for Damages. Each petition alleged, among other things, that the members of Cleco Corporation’s Board of Directors breached their fiduciary duties to Cleco’s shareholders by approving the Merger Agreement because it allegedly does not value Cleco adequately, failing to structure a process through which shareholder value would be maximized and engaging in self-dealing by ignoring conflicts of interest. The Butler and Creative Life Services petitions also allege that the directors breached their fiduciary duties by failing to disclose material information about the Merger. Each petition further alleged that Cleco, Cleco Partners, Merger



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Sub, and certain of the investors in Cleco Partners aided and abetted the directors’ breaches of fiduciary duty. In December 2014, the directors and Cleco filed declinatory exceptions in each action on the basis that each action was improperly brought in Orleans Parish and should either be transferred to the Ninth Judicial District Court for Rapides Parish or dismissed. Also in December 2014, the plaintiffs in each action jointly filed a motion to consolidate the three actions pending in Orleans Parish and to appoint interim co-lead plaintiffs and co-lead counsel. In January 2015, the Court in the Creative Life Services case sustained the defendants’ declinatory exceptions and dismissed the case so that it could be transferred to the Ninth Judicial District Court for Rapides Parish. In February 2015, the plaintiffs in Butler and Cashen also consented to the dismissal of their cases from Orleans Parish so they could be transferred to the Ninth Judicial District Court for Rapides Parish.

In February 2015, the Ninth Judicial District Court for Rapides Parish held a hearing on a motion for preliminary injunction filed by plaintiffs Moore , L’Herisson , and Trahan seeking to enjoin the shareholder vote for approval of the Merger Agreement. Following the hearing, the Court denied the plaintiffs’ motion. In June 2015, three of the plaintiffs filed their Second Consolidated Amended Verified Derivative and Class Action Petition. This will be considered according to a schedule established by the Ninth Judicial District Court for Rapides Parish. Cleco filed exceptions seeking dismissal of the amended petition in July 2015.

In March 2016, the plaintiffs filed their Third Consolidated Amended Verified Derivative Petition for Damages and Preliminary and Permanent Injunction. In May 2016, the plaintiffs filed their Fourth Verified Consolidated Amended Class Action Petition. This petition eliminated the request for preliminary and permanent injunction and also named an additional executive officer as a defendant. Cleco filed exceptions seeking dismissal of the amended Petition. A hearing was held on September 15, 2016, and on September 26, 2016, the District Court granted the exceptions filed by Cleco and dismissed all claims asserted by the former shareholders. The plaintiffs appealed the District Court’s ruling to the Louisiana Third Circuit Court of Appeal. The Third Circuit Court of Appeal heard oral arguments in the case in September 2017. In December 2017, the Third Circuit Court of Appeal issued an order reversing and remanding the case to the District Court for further proceedings. On January 12, 2018, Cleco filed a writ with the Louisiana Supreme Court seeking review of the Third Circuit Court of Appeal’s decision. On March 2, 2018, the Louisiana Supreme Court denied the writ. Cleco believes that the allegations of the petitions in each action are without merit and that it has substantial meritorious defenses to the claims set forth in each of the petitions.

Gulf Coast Spinning

In September 2015, a potential customer sued Cleco for failure to fully perform an alleged verbal agreement to lend or otherwise fund its startup costs to the extent of $6.5 million . Gulf Coast Spinning Company, LLC (Gulf Coast), the primary plaintiff, alleges that Cleco promised to assist it in raising approximately $60.0 million , which Gulf Coast needed to construct a cotton spinning facility near Bunkie, Louisiana. According to the petition filed by Gulf Coast in the 12 ^th Judicial District Court for Avoyelles Parish, Louisiana (the “District Court”), Cleco made such promises of funding assistance in order to cultivate a new industrial electric customer which

would increase its revenues under a power supply agreement that it executed with Gulf Coast. Gulf Coast seeks unspecified damages arising from its inability to raise sufficient funds to complete the project, including lost profits.

Cleco filed an Exception of No Cause of Action arguing that the case should be dismissed. The District Court denied Cleco’s exception in December 2015, after considering briefs and arguments. In January 2016, Cleco appealed the District Court’s denial of its exception by filing with the Third Circuit Court of Appeal. In June 2016, the Third Circuit Court of Appeal denied the request to have the case dismissed. In July 2016, Cleco filed a writ to the Louisiana Supreme Court seeking a review of the District Court’s denial of Cleco’s exception. In November 2016, the Louisiana Supreme Court denied Cleco’s writ application.

In February 2016, the parties agreed to a stay of all proceedings pending discussions concerning settlement. In May 2016, the District Court lifted the stay at the request of Gulf Coast. The parties are currently participating in discovery. Cleco believes the allegations of the petition are contradicted by the written documents executed by Gulf Coast, are otherwise without merit, and that it has substantial meritorious defenses to the claims alleged by Gulf Coast.

Sabine River Flood

In March 2017, Cleco was served with a summons in Perry Bonin, Ace Chandler, and Michael Manuel, et al v. Sabine River Authority of Texas and Sabine River Authority of Louisiana , No. B-160173-C. The action was filed in the 163rd Judicial District Court for Orange County, Texas, and relates to flooding that occurred in Texas and Louisiana in March 2016. The plaintiffs have alleged that the flooding was the result of the release of water from the Toledo Bend spillway gates into the Sabine River. While the plaintiffs have made numerous allegations, they have specifically alleged that Cleco Power, included as one of several companies and governmental bodies, failed to repair one of the two hydroelectric generators at the Toledo Bend Dam, which in turn contributed to the flooding. Cleco Power does not operate the hydroelectric generator.

The suit was removed to federal court in Texas. The new federal case is Perry Bonin, et al. v. Sabine River Authority of Texas et al. , No. 17-cv-134, U.S. District Court for the Eastern District of Texas ( Bonin Case ). The plaintiffs moved to remand the case to state court, but the district court found that the case raises a substantial federal question and denied the motion to remand. Cleco Power, along with its co-defendants, filed a motion to dismiss on various grounds, primarily arguing that the plaintiffs’ claims are preempted because they infringe on FERC’s exclusive control of dam operations. The district court granted the motion to dismiss in part, declining to rule on some of the arguments raised by the defendants, and granted the plaintiffs leave to amend their complaint. The plaintiffs filed a Fifth Amended Complaint in March 2018. Cleco Power filed a new motion to dismiss the plaintiffs’ claims. The plaintiffs have not yet responded to Cleco Power’s motion.

On March 7, 2018, approximately 26 other individual plaintiffs filed a petition against Cleco Power and other defendants in Larry Addison, et al. v. Sabine River Authority of Texas, et al. , No. D180096-C. The action was filed in the 260th Judicial District Court for Orange County, Texas. The defendants removed the case to federal court on April 6, 2018. The new federal case is Larry Addison, et al. v. Sabine River Authority of Texas, et al ., No. 17-cv-153, U.S. District Court for the Eastern District of Texas. The allegations are essentially



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identical to those in the Bonin Case . On April 13, 2018, Cleco Power filed a motion to dismiss on the same grounds that previously were successful in the Bonin Case . The plaintiffs have not yet responded to Cleco Power’s motion. Management believes that both cases, as they relate to Cleco Power, have no merit.

LPSC Audits

Fuel Audit

Generally, the cost of fuel used for electric generation and the cost of power purchased for utility customers are recovered through the LPSC-established FAC that enables Cleco Power to pass on to its customers substantially all such charges. Recovery of FAC costs is subject to periodic fuel audits by the LPSC. The LPSC FAC General Order issued in November 1997, in Docket No. U-21497 provides that an audit of FAC filings will be performed at least every other year. On March 13, 2018, Cleco Power received notice of an FAC audit from the LPSC for the period of January 1, 2016, to December 31, 2017. The total amount of fuel expense included in the audit is $536.2 million . Periods subsequent to December 31, 2017, are also subject to audit. On April 27, 2018, Cleco Power received its first set of data requests from the LPSC. Management is unable to predict or give a reasonable estimate of the possible range of the disallowance, if any, related to this audit. Historically, the disallowances have not been material. If a disallowance of fuel cost is ordered resulting in a refund, any such refund could have a material adverse effect on the results of operations, financial condition or cash flows of the Registrants.

Environmental Audit

In 2009, the LPSC issued Docket No. U-29380 Subdocket A, which provides for an EAC to recover from customers certain costs of environmental compliance. The costs eligible for recovery are prudently incurred air emissions credits associated with complying with federal, state, and local air emission regulations that apply to the generation of electricity reduced by the sale of such allowances. Also eligible for recovery are variable emission mitigation costs, which are the costs of reagents such as ammonia and limestone that are a part of the fuel mix used to reduce air emissions, among other things. Cleco Power currently has EAC filings for 2016 and thereafter that are subject to audit. Management is unable to predict or give a reasonable estimate of the possible range of the disallowance, if any, related to these filings.

Cleco Power incurs environmental compliance expenses for reagents associated with the compliance standards of MATS. In June 2015, the U.S. Supreme Court remanded the MATS rule to the D.C. Circuit Court of Appeals. In December 2015, the D.C. Circuit Court of Appeals remanded the rule to the EPA; however, the D.C. Circuit Court of Appeals did not vacate this rule. In April 2016, the EPA released a final supplemental finding that, even considering costs, it is appropriate and necessary to regulate hazardous air pollutants. By the June 2016 deadline, six petitions were filed with the U.S. Court of Appeals for the D.C. Circuit Court of Appeals for review of the EPA’s findings. At the request of the EPA, in April 2017, the court issued an order holding the cases in abeyance pending the EPA’s review of its supplemental finding. These expenses are also eligible for recovery through Cleco Power’s EAC and are subject to periodic review by the LPSC.

FERC Audit

On March 13, 2018, the Division of Audits and Accounting within the Office of Enforcement of FERC initiated an audit of Cleco Power for the period January 1, 2014, to the present. No data requests have been received and management is unable to determine the outcome or timing of the audit.

Transmission ROE

Two complaints were filed with FERC seeking to reduce the ROE component of the transmission rates that MISO transmission owners, including Cleco, may collect under the MISO tariff. The complaints sought to reduce the 12.38% ROE used in MISO’s transmission rates to a proposed 6.68% . The first complaint, filed in November 2013, was for the period November 2013 through February 2015. In September 2016, FERC issued a Final Order in response to the first complaint establishing a 10.32% ROE. In February 2017, $1.2 million of refunds relating to the first complaint were submitted to MISO.

The second complaint, filed in February 2015, was for the period February 2015 through May 2016. In June 2016, an ALJ issued an initial decision in the second rate case docket recommending a 9.70% base ROE. Cleco Power is unable to determine when a binding FERC order will be issued on the second ROE complaint.

In November 2014, the MISO transmission owners committee, of which Cleco is a member, filed a request with FERC for an incentive to increase the new ROE by 50 basis points for RTO participation as allowed by the MISO tariff. In January 2015, FERC granted the request. The collection of the adder is delayed until the resolution of the ROE complaint proceedings.

As of March 31, 2018 , Cleco Power had $2.1 million accrued, including interest, for potential reductions to the ROE. Management believes a reduction in the ROE, as well as any additional refund, will not have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Other

Cleco is involved in various litigation matters, including regulatory, environmental, and administrative proceedings before various courts, regulatory commissions, arbitrators, and governmental agencies regarding matters arising in the ordinary course of business. The liability Cleco may ultimately incur with respect to any one of these matters in the event of a negative outcome may be in excess of amounts currently accrued. Management regularly analyzes current information and, as of March 31, 2018 , believes the probable and reasonably estimable liabilities based on the eventual disposition of these matters are $4.6 million and has accrued this amount.

Off-Balance Sheet Commitments and Guarantees

Cleco Holdings and Cleco Power have entered into various off-balance sheet commitments, in the form of guarantees and standing letters of credit, in order to facilitate their activities and the activities of Cleco Holdings’ subsidiaries and equity investees (affiliates). Cleco Holdings and Cleco Power have also agreed to contractual terms that require the Registrants to pay third parties if certain triggering events occur. These contractual terms generally are defined as guarantees.

Cleco Holdings entered into these off-balance sheet commitments in order to entice desired counterparties to contract with its affiliates by providing some measure of credit



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assurance to the counterparty in the event Cleco’s affiliates do not fulfill certain contractual obligations. If Cleco Holdings had not provided the off-balance sheet commitments, the desired counterparties may not have contracted with Cleco’s affiliates, or may have contracted with them at terms less favorable to its affiliates.

The off-balance sheet commitments are not recognized on Cleco and Cleco Power’s Condensed Consolidated Balance Sheets because management has determined that Cleco and Cleco Power’s affiliates are able to perform the obligations under their contracts and that it is not probable that payments by Cleco or Cleco Power will be required.

Cleco Holdings provided guarantees and indemnities to Entergy Louisiana and Entergy Gulf States as a result of the sale of the Perryville facility in 2005. The remaining indemnifications relate to environmental matters that may have been present prior to closing. These remaining indemnifications have no limitations to time. The maximum amount of the potential payment to Entergy Louisiana and Entergy Gulf States is $42.4 million . Management does not expect to be required to pay Entergy Louisiana and Entergy Gulf States under these guarantees.

On behalf of Acadia, Cleco Holdings provided guarantees and indemnifications as a result of the sales of Acadia Unit 1 to Cleco Power and Acadia Unit 2 to Entergy Louisiana in 2010 and 2011, respectively. The remaining indemnifications relate to the fundamental organizational structure of Acadia. These remaining indemnifications have no limitations as to time or maximum potential future payments. Management does not expect to be required to pay Cleco Power or Entergy Louisiana under these guarantees.

Cleco Holdings provided indemnifications to Cleco Power as a result of the transfer of Coughlin to Cleco Power in March 2014. Cleco Power also provided indemnifications to Cleco Holdings and Evangeline as a result of the transfer of Coughlin to Cleco Power. The maximum amount of the potential payment to Cleco Power, Cleco Holdings, and Evangeline for their respective indemnifications is $40.0 million , except for indemnifications relating to the fundamental organizational structure of each respective entity, of which the maximum amount is $400.0 million . Management does not expect to be required to make any payments under these indemnifications.

As part of the Amended Lignite Mining Agreement, Cleco Power and SWEPCO, joint owners of Dolet Hills Power Station, have agreed to pay the loan and lease principal obligations of the lignite miner, DHLC, when due if DHLC does not have sufficient funds or credit to pay. Any amounts paid on behalf of the miner would be credited by the lignite miner against future invoices for lignite delivered. The maximum projected payment by Cleco Power under this guarantee is estimated to be $106.5 million ; however, the Amended Lignite Mining Agreement does not contain a cap. The projection is based on the forecasted loan and lease obligations to be incurred by DHLC, primarily for purchases of equipment. Cleco Power has the right to dispute the incurrence of loan and lease obligations through the review of the mining plan before the incurrence of such loan and lease obligations. The Amended Lignite Mining Agreement is not expected to terminate pursuant to its terms until 2036 and does not affect the amount the Registrants can borrow under their credit facilities. Currently, management does not expect to be required to pay DHLC under this guarantee.

Generally, neither Cleco Holdings nor Cleco Power has recourse that would enable them to recover amounts paid

under their guarantee or indemnification obligations. There are no assets held as collateral for third parties that either Cleco Holdings or Cleco Power could obtain and liquidate to recover amounts paid pursuant to the guarantees or indemnification obligations.

Other Commitments

NMTC Fund

In 2008, Cleco Holdings and US Bancorp Community Development (USBCDC) formed the NMTC Fund. Cleco Holdings has a 99.9% membership interest in the NMTC Fund and USBCDC has a 0.1% interest. The purpose of the NMTC Fund is to invest in projects located in qualified active low-income communities that are underserved by typical debt capital markets. These investments are designed to generate NMTCs and Historical Rehabilitation tax credits. The NMTC Fund was later amended to include renewable energy investments. The majority of the energy investments qualify for grants under Section 1603 of the ARRA. The tax benefits received from the NMTC Fund reduce the federal income tax obligations of Cleco Holdings. In total, Cleco Holdings contributed $285.5 million of equity contributions to the NMTC Fund and will receive at least $303.8 million in the form of tax credits, tax losses, capital gains/losses, earnings, and cash over the 10 -year life of the investment. The difference between equity contributions and total benefits received were recognized over the life of the NMTC Fund as net tax benefits were delivered. As of March 31, 2018 , the amount of tax benefits delivered was $18.3 million . Due to the right of offset, the investment and associated debt are presented in Other deferred charges, on Cleco’s Condensed Consolidated Balance Sheet.

By using the cost method for investments, the gross investment amortization expense will be recognized over a ten -year period. The basis of the investment is reduced by the grants received under Section 1603 of the ARRA, which allow certain projects to receive a federal grant in lieu of tax credits, and other cash. Periodic amortization of the investment and the deferred taxes generated by the basis reduction temporary difference are included as components of income tax expense.

Fuel Transportation Agreement

In 2012, Cleco Power entered into an amended agreement with Savage Services for 42 dedicated barges used to transport petroleum coke and limestone to Madison Unit 3. The amended agreement met the accounting definition of a capital lease until its expiration on August 31, 2017. In September 2017, Cleco Power entered into an operating lease that automatically renewed on a month-to-month basis until terminated by either party for use of the 42 barges. On April 2, 2018, the operating lease was terminated and Cleco Power entered into a new agreement with Savage Inland Marine for continued use of the 42 dedicated barges through March 2033. The new agreement meets the accounting definition of a capital lease.

Other

Cleco has accrued for liabilities related to third parties, employee medical benefits, and AROs.

Risks and Uncertainties

Cleco could be subject to possible adverse consequences if Cleco’s counterparties fail to perform their obligations or if



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

Cleco or its affiliates are not in compliance with loan agreements or bond indentures.

Access to capital markets is a significant source of funding for both short- and long-term capital requirements not satisfied by operating cash flows. On February 7, 2018, taking into consideration the pending NRG South Central acquisition, Moody’s placed Cleco Holdings Baa3 credit rating on review for downgrade and affirmed Cleco Power at A3 (stable). Also on February 7, 2018, S&P affirmed Cleco Holdings’ and Cleco Power’s credit ratings at BBB- (stable) and BBB+ (stable), respectively. On April 7, 2018, Moody’s published a credit rating update that resulted in no change to the credit ratings or outlooks of Cleco Holdings or Cleco Power. If Cleco Holdings’ or Cleco Power’s credit ratings were to be downgraded by Moody’s or S&P, Cleco Holdings and/or Cleco Power would be required to pay additional fees and incur higher interest rates for borrowings under their respective credit facilities.

Changes in the regulatory environment or market forces could cause Cleco to determine its assets have suffered an other-than-temporary decline in value, whereby an impairment would be required and Cleco’s financial condition could be materially adversely affected.

Cleco Power is a participant in the MISO market. Energy prices in the MISO market are based on LMP, which includes a component directly related to congestion on the transmission system. Pricing zones with greater transmission congestion may have a higher LMP. Physical transmission constraints present in the MISO market could increase energy costs within Cleco Power’s pricing zones. Cleco Power uses FTRs to mitigate transmission congestion price risks. Changes to anticipated transmission paths may result in an unexpected increase in energy costs to Cleco Power.

Note 13 — Affiliate Transactions

Cleco Power has balances that are payable to or due from its affiliates. The following table is a summary of those balances:



	AT MAR. 31, 2018				AT DEC. 31, 2017
(THOUSANDS)	ACCOUNTS RECEIVABLE		ACCOUNTS PAYABLE		ACCOUNTS RECEIVABLE		ACCOUNTS PAYABLE
Cleco Holdings	$	90	$	325	$	743	$	113
Support Group	1,221		9,644		608		8,582
Other ⁽¹⁾	—		—		4		2
Total	$	1,311	$	9,969	$	1,355	$	8,697
⁽¹⁾ Represents Attala and Perryville.



Note 14 — Intangible Assets

During 2008, Cleco Katrina/Rita acquired a $177.5 million intangible asset which includes $176.0 million for the right to bill and collect storm recovery charges from customers of Cleco Power and $1.5 million of financing costs. The intangible asset’s expected amortization expense is based on the estimated collections from Cleco Power’s customers. At the

end of its life, the asset will have no residual value. At the date of the Merger, the gross balance of the Cleco Katrina/Rita intangible asset for Cleco was adjusted to be net of accumulated amortization, as no accumulated amortization existed on the date of the Merger. During the three months ended March 31, 2018, and 2017, Cleco Katrina/Rita recognized amortization expense of $4.5 million and $3.5 million , respectively, based on actual collections.

As a result of the Merger, fair value adjustments were recorded on Cleco’s Consolidated Balance Sheet for the valuation of the Cleco trade name and long-term wholesale power supply agreements. At the end of their life, these intangible assets will have no residual value. The trade name intangible asset is being amortized over its estimated economic useful life of 20 years . During the three months ended March 31, 2018, and 2017, Cleco recognized amortization expense of less that $0.1 million on the trade name intangible asset.

The intangible assets related to the power supply agreements are being amortized over the remaining life of each applicable contract ranging between 5 years and 17 years . During the three months ended March 31, 2018, and 2017, Cleco recognized a reduction of revenue of $2.4 million , and $3.5 million , respectively, on the intangible assets for the power supply agreements.

The following tables summarize the balances for intangible assets subject to amortization for Cleco and Cleco Power as of March 31, 2018, and December 31, 2017:



Cleco
(THOUSANDS)	AT MAR. 31, 2018			AT DEC. 31, 2017
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	70,594		$	70,594
Power supply agreements	85,104			85,104
Trade name	5,100			5,100
Gross carrying amount	160,798			160,798
Accumulated amortization	(52,917		)	(45,948		)
Net intangible assets subject to amortization	$	107,881		$	114,850



Cleco Power
(THOUSANDS)	AT MAR. 31, 2018			AT DEC. 31, 2017
Cleco Katrina/Rita right to bill and collect storm recovery charges	$	177,537		$	177,537
Accumulated amortization	(140,321		)	(135,836		)
Net intangible assets subject to amortization	$	37,216		$	41,701



Note 15 — Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are summarized in the following tables for Cleco and Cleco Power. All amounts are reported net of income taxes. Amounts in parentheses indicate losses.



Cleco
	FOR THE THREE MONTHS ENDED MAR. 31, 2018
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS			NET LOSS ON CASH FLOW HEDGES		TOTAL AOCI
Balances, beginning of period	$	(2,921	)	$	—	$	(2,921	)
Amounts reclassified from accumulated other comprehensive income
Amortization of postretirement benefit net loss	43			—		43
Net current-period other comprehensive income	43			—		43
Balances, Mar. 31, 2018	$	(2,878	)	$	—	$	(2,878	)



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CLECO POWER		2018 1ST QUARTER FORM 10-Q



	FOR THE THREE MONTHS ENDED MAR. 31, 2017
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS			NET LOSS ON CASH FLOW HEDGES		TOTAL AOCI
Balances, beginning of period	$	1,500		$	—	$	1,500
Other comprehensive loss before reclassifications
Postretirement benefits adjustment during the period	(2,065		)	—		(2,065		)
Amounts reclassified from accumulated other comprehensive loss
Amortization of postretirement benefit net gain	(126		)	—		(126		)
Net current-period other comprehensive loss	(2,191		)	—		(2,191		)
Balances, Mar. 31, 2017	$	(691	)	$	—	$	(691	)



Cleco Power
	FOR THE THREE MONTHS ENDED MAR. 31, 2018
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS			NET LOSS ON CASH FLOW HEDGES			TOTAL AOCI
Balances, beginning of period	$	(8,377	)	$	(5,306	)	$	(13,683	)
Amounts reclassified from accumulated other comprehensive income
Amortization of postretirement benefit net loss	233			—			233
Reclassification of net loss to interest charges	—			64			64
Net current-period other comprehensive income	233			64			297
Balances, Mar. 31, 2018	$	(8,144	)	$	(5,242	)	$	(13,386	)



	FOR THE THREE MONTHS ENDED MAR. 31, 2017
(THOUSANDS)	POSTRETIREMENT BENEFIT NET LOSS			NET LOSS ON CASH FLOW HEDGES			TOTAL AOCI
Balances, beginning of period	$	(7,905	)	$	(5,517	)	$	(13,422	)
Other comprehensive income before reclassifications
Postretirement benefit adjustments during the period	(584		)	—			(584		)
Amounts reclassified from accumulated other comprehensive income
Amortization of postretirement benefit net loss	164			—			164
Reclassification of net loss to interest charges	—			53			53
Net current-period other comprehensive (loss) income	(420		)	53			(367		)
Balances, Mar. 31, 2017	$	(8,325	)	$	(5,464	)	$	(13,789	)



Note 16 — Plan of Acquisition

On February 6, 2018, Cleco Cajun entered into the Purchase and Sale Agreement with NRG Energy and NRG South Central. Pursuant to the terms of the Purchase and Sale Agreement, Cleco Cajun agreed to acquire from NRG Energy all of the outstanding membership interests in NRG South Central, which indirectly owns (i) a 176 -MW natural-gas-fired generating station located in Sterlington, Louisiana, (ii) a 220 -MW natural-gas-fired facility and a 210 -MW natural-gas-fired peaking facility both located in Jarreau, Louisiana, (iii) a 580 -MW coal-fired generating facility, a 540 -MW natural-gas-fired generating station, and 58% of a 588 -MW coal-fired generating station all located in New Roads, Louisiana, (iv) 225 MW of a 300 -MW natural-gas-fired peaking facility located in Jennings, Louisiana, and (v) a 1,263 -MW natural-gas-fired generating station located in Deweyville, Texas (the Cottonwood Plant), for approximately $1.0 billion , subject to customary working capital and other adjustments (the NRG Acquisition). Cleco expects to fund the NRG Acquisition with proceeds from the Debt Financing (as defined below), equity contributions, and cash on hand.

The transaction remains subject to customary closing conditions, including receipt of required regulatory approvals, including approvals by FERC, the LPSC, the Committee on Foreign Investment in the United States, MISO, the Public Utility Commission of Texas, and the Federal Communications Commission. On February 27, 2018, Cleco filed a joint application seeking approval of the transaction with FERC. On

March 27, 2018, Cleco filed an application with the Committee on Foreign Investment in the United States seeking approval of the transaction. On April 4, 2018, Cleco filed an application with the LPSC seeking approval of the transaction. Also on April 4, 2018, the Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. On April 13, 2018, Cleco filed an application with MISO and the Public Utility Commission of Texas seeking approval of the transaction. On April 23, 2018, Cleco received its first set of data requests from the LPSC staff for the LPSC application. Responses are due by May 8, 2018.

Cleco Cajun, NRG Energy, and NRG South Central have each made customary representations, warranties and covenants in the Purchase and Sale Agreement, which includes customary indemnification provisions. Cleco Holdings has agreed to guarantee the obligations of Cleco Cajun, subject to certain limitations. In addition, the closing is conditioned upon the execution and delivery of a lease agreement between Cottonwood Energy and a special-purpose entity that is a subsidiary of NRG Energy pursuant to which NRG Energy will lease back the Cottonwood Plant and could operate it until May 2025. Upon closing, Cottonwood Energy will become a subsidiary of Cleco Cajun.

The Purchase and Sale Agreement also contains certain customary termination rights for both Cleco Cajun and NRG Energy, including a termination right for each if the closing does not occur by February 6, 2019. Management expects the transaction to close before the end of 2018.



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CLECO POWER		2018 1ST QUARTER FORM 10-Q

In connection with the Purchase and Sale Agreement, Cleco Holdings entered into a debt commitment letter, dated as of February 6, 2018, with Mizuho Bank, Ltd. (Mizuho), Credit Agricole Corporate and Investment Bank (CA-CIB) and The Bank of Nova Scotia (Scotiabank), pursuant to which Mizuho, CA-CIB, and Scotiabank have committed to provide (a) an acquisition loan facility in the aggregate principal amount of up to $300.0 million (the Acquisition Loan Facility), (b) a term loan

facility in the aggregate principal amount of up to $300.0 million (the Term Loan Facility), and (c) an incremental revolving facility under Cleco Holding’s existing bank credit agreement with availability of $75.0 million (and together with the Acquisition Loan Facility and the Term Loan Facility, the Debt Financing). The Debt Financing is subject to various conditions, including the execution of definitive documentation and other customary closing conditions.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cleco uses its website, https://www.cleco.com, as a routine channel for distribution of important information, including news releases and financial information. Cleco’s website is the primary source of publicly disclosed news about Cleco. Cleco is providing the address to its website solely for informational purposes and does not intend for the address to be an active link. The contents of the website are not incorporated into this Combined Quarterly Report on Form 10-Q.

The following discussion and analysis should be read in combination with the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2017 , and Cleco and Cleco Power’s Condensed Consolidated Financial Statements contained in this Combined Quarterly Report on Form 10-Q. The information included therein is essential to understanding the following discussion and analysis. Below is information concerning the consolidated results of operations of Cleco for the three months ended March 31, 2018 , and 2017 .

OVERVIEW

Cleco is a regional energy company that conducts substantially all of its business operations through its primary subsidiary, Cleco Power. Cleco Power is a regulated electric utility company that owns nine generating units with a total nameplate capacity of 3,310 MW and serves approximately 290,000 customers in Louisiana through its retail business and supplies wholesale power in Louisiana and Mississippi.

Recent Developments

On February 6, 2018, Cleco Cajun entered into the Purchase and Sale Agreement with NRG Energy and NRG South Central. Upon the expected closing of the transaction, Cleco anticipates Cleco Cajun will be a new reportable segment. For more information on the Purchase and Sale Agreement and related transactions, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 16 — Plan of Acquisition .”

Cleco Power

Many factors affect Cleco Power’s primary business of generating, delivering, and selling electricity. These factors include weather and the presence of a stable regulatory environment, which impacts cost recovery and the ROE, as well as the recovery of costs related to growing energy demand and rising fuel prices; the ability to increase energy sales while containing costs; the ability to reliably deliver power to its jurisdictional customers; the ability to comply with increasingly stringent regulatory and environmental standards; and the ability to successfully perform in MISO while subject to the related operating challenges and uncertainties, including increased wholesale competition. Key initiatives on which Cleco Power is currently working include continuing

construction on the St. Mary Clean Energy Center project; initiating construction of the Terrebonne to Bayou Vista Transmission project and the Coughlin Pipeline project; continuing the START project; and maintaining and growing its wholesale and retail business. These initiatives are discussed below.

St. Mary Clean Energy Center Project

The St. Mary Clean Energy Center project includes Cleco Power constructing, owning, and operating a 50-MW generating unit to be fueled by waste heat from Cabot Corporation’s carbon black manufacturing plant in Franklin, Louisiana. Construction began in October 2016 and the unit is expected to be commercially operational in the third quarter of 2018 at an estimated cost of $110.7 million. The project is expected to generate more than 300,000 MWh of zero additional carbon emitting energy each year. As of March 31, 2018 , Cleco Power had spent $85.0 million on the project.

Terrebonne to Bayou Vista Transmission Project

The Terrebonne to Bayou Vista Transmission project includes the construction of additional transmission interconnection facilities south of Teche Power Station. The project is expected to increase reliability, reduce congestion, and provide hurricane hardening of the 230-kilovolt transmission system for customers in south Louisiana. The project team completed negotiations on the right-of-way and land acquisition agreements. Cleco Power’s portion of the joint project with Entergy Louisiana is expected to cost $62.4 million. Construction is expected to be complete in the first quarter of 2019. As of March 31, 2018 , Cleco Power had spent $17.2 million on the project.

Coughlin Pipeline Project

The Coughlin Pipeline project includes construction of a pipeline directly connecting the Pine Prairie Energy Center to Cleco’s Coughlin Power Station. The project is expected to increase reliability for fuel delivery and mitigate exposure to transportation cost increases. In June 2017, the LPSC approved the establishment of a regulatory asset for the revenue requirement associated with the Coughlin Pipeline project until Cleco Power seeks recovery in the new FRP, which is anticipated to be effective July 1, 2020. The project is expected to be complete in the third quarter of 2019 with an estimated cost of $32.0 million. As of March 31, 2018 , Cleco Power had spent $0.4 million on the project.

START Project

The START project includes replacement of and improvement to Cleco’s enterprise business applications. The project’s objectives are to gain efficiencies through consistent, industry leading work processes and practices; enable better decision making through data transparency across business functions;



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

mitigate risk through knowledge transfer and better process documentation; provide a modernized, flexible platform to support future growth and changing business models; and provide customer-centric focus through technology and flexibility. Management expects the project to be complete in the third quarter of 2019. The total estimated project cost is $136.5 million. As of March 31, 2018 , Cleco had spent $48.7 million on the project.

Other

Cleco Power is working to secure load growth opportunities that include renewing existing franchises and wholesale contracts, pursuing new wholesale contracts and franchises, and adding new retail load opportunities with large industrial, commercial, and residential load. The retail opportunities include sectors such as agriculture, oil and gas, chemicals, metals, national accounts, government and military, wood and paper, health care, information technology, transportation, and other manufacturing.

RESULTS OF OPERATIONS

Comparison of the Three Months Ended March 31, 2018 , and 2017



Cleco
	FOR THE THREE MONTHS ENDED MAR. 31,
							FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2018			2017			VARIANCE			CHANGE
Operating revenue, net	$	276,760		$	250,501		$	26,259		10.5	%
Operating expenses	232,026			209,039			(22,987		)	(11.0	)%
Operating income	$	44,734		$	41,462		$	3,272		7.9	%
Allowance for equity funds used during construction	$	2,363		$	911		$	1,452		159.4	%
Other expense, net	$	(3,000	)	$	(1,568	)	$	(1,432	)	(91.3	)%
Federal and state income tax expense	$	2,862		$	3,107		$	245		7.9	%
Net income	$	10,861		$	6,292		$	4,569		72.6	%

Operating revenue, net increased $26.3 million during the first quarter of 2018 compared to the first quarter of 2017 primarily due to higher base revenue, higher fuel cost recovery revenue, and higher other operations revenue, partially offset by higher electric customer credits at Cleco Power.

Operating expenses increased $23.0 million during the first quarter of 2018 compared to the first quarter of 2017 primarily due to higher recoverable fuel and power purchased expenses, higher generation maintenance expenses, higher non-recoverable fuel and power purchased expenses, and higher depreciation and amortization at Cleco Power. These increases were partially offset by lower other operations expense at Cleco Power.

Allowance for equity funds used during construction increased $1.5 million during the first quarter of 2018 compared to the first quarter of 2017 primarily due to higher construction costs related to the St. Mary Clean Energy Center project, the START project, and the Terrebonne to Bayou Vista Transmission project.

Other expense, net increased $1.4 million during the first quarter of 2018 compared to the first quarter of 2017 primarily due to the decrease in the cash surrender value of life insurance policies at Cleco Holdings due to unfavorable market conditions, partially offset by higher royalty income at Cleco Power.

Federal and state income tax expense decreased $0.2 million during the first quarter of 2018 compared to the first quarter of 2017 primarily due to $1.3 million for the flowthrough of state tax benefits, $0.6 million for adjustments related to the TCJA, $0.5 million for adjustments for permanent tax differences, and $0.1 million for miscellaneous tax items. These decreases were partially offset by $1.1 million to record tax expense at the consolidated projected annual effective tax rate, $1.1 million for the change in pretax income, excluding AFUDC equity, and $0.1 million for tax credits. The effective income tax rate for the first quarter of 2018 and 2017 was 20.9% and 33.1% , respectively. The estimated annual effective income tax rate used during the first quarter of 2018 and 2017 for Cleco may not be indicative of the full-year income tax rate.

Results of operations for Cleco Power are more fully described below.



Cleco Power
				FOR THE THREE MONTHS ENDED MAR. 31,
							FAVORABLE/(UNFAVORABLE)
(THOUSANDS)	2018			2017				VARIANCE			CHANGE
Operating revenue
Base	$	154,321		$	143,117			$	11,204		7.8	%
Fuel cost recovery	110,310			94,436				15,874			16.8	%
Electric customer credits	(7,647		)	(435		)		(7,212		)	*
Other operations	22,195			16,365				5,830			35.6	%
Affiliate revenue	208			219				(11		)	(5.0	)%
Operating revenue, net	279,387			253,702				25,685			10.1	%
Operating expenses
Recoverable fuel and power purchased	110,311			94,280				(16,031		)	(17.0	)%
Non-recoverable fuel and power purchased	9,864			7,556				(2,308		)	(30.5	)%
Other operations	27,307			30,264				2,957			9.8	%
Maintenance	29,078			24,420				(4,658		)	(19.1	)%
Depreciation and amortization	40,388			38,758				(1,630		)	(4.2	)%
Taxes other than income taxes	11,918			12,000				82			0.7	%
Total operating expenses	228,866			207,278				(21,588		)	(10.4	)%
Operating income	$	50,521		$	46,424			$	4,097		8.8	%
Allowance for equity funds used during construction	$	2,363		$	911			$	1,452		159.4	%
Federal and state income tax expense	$	7,997		$	9,855			$	1,858		18.9	%
Net income	$	26,004		$	17,854			$	8,150		45.6	%
* Not meaningful

Cleco Power’s net income in the first quarter of 2018 increased $8.2 million compared to the first quarter of 2017 primarily as a result of the following factors:


•	higher base revenue,


•	higher other operations revenue,


•	lower other operations expense,


•	lower federal and state income tax expense, and


•	higher allowance for equity funds used during construction.



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CLECO POWER		2018 1ST QUARTER FORM 10-Q

These increases were partially offset by:


•	higher electric customer credits,


•	higher maintenance expense,


•	higher non-recoverable fuel and power purchased, and


•	higher depreciation and amortization.

The following table shows the components of Cleco Power’s retail and wholesale customer sales related to base revenue:



	FOR THE THREE MONTHS ENDED MAR. 31,
(MILLION kWh)	2018	2017	FAVORABLE/ (UNFAVORABLE)
Electric sales
Residential	858	711		20.7	%
Commercial	612	584		4.8	%
Industrial	507	488		3.9	%
Other retail	34	31		9.7	%
Total retail	2,011	1,814		10.9	%
Sales for resale	672	629		6.8	%
Total retail and wholesale customer sales	2,683	2,443		9.8	%

The following table shows the components of Cleco Power’s base revenue:



	FOR THE THREE MONTHS ENDED MAR. 31,
(THOUSANDS)	2018		2017		FAVORABLE/ (UNFAVORABLE)
Electric sales
Residential	$	62,779	$	55,028		14.1	%
Commercial	47,464		45,467			4.4	%
Industrial	21,924		20,719			5.8	%
Other retail	2,740		2,560			7.0	%
Surcharge	5,238		5,082			3.1	%
Total retail	140,145		128,856			8.8	%
Sales for resale	14,176		14,261			(0.6	)%
Total base revenue	$	154,321	$	143,117		7.8	%

Cleco Power’s residential customers’ demand for electricity is affected largely by weather. Weather generally is measured in cooling degree-days and heating degree-days. A cooling degree-day is an indication of the likelihood that a consumer will use air conditioning, while a heating degree-day is an indication of the likelihood that a consumer will use heating. An increase in heating degree-days does not produce the same increase in revenue as an increase in cooling degree-days because alternative heating sources are more readily available, and winter energy is typically priced below the rate charged for energy used in the summer. Normal heating degree-days and cooling degree-days are calculated for a month by separately calculating the average actual heating and cooling degree-days for that month over a period of 30 years.

The following chart shows how heating and cooling degree-days varied from normal conditions and from the prior period. Cleco Power uses weather data provided by the National Oceanic and Atmospheric Administration to determine cooling and heating degree-days.



	FOR THE THREE MONTHS ENDED MAR. 31,
				2018 CHANGE
	2018	2017	NORMAL	PRIOR YEAR		NORMAL
Heating degree-days	797	421	890	89.3	%	(10.4	)%
Cooling degree-days	199	232	78	(14.2	)%	155.1	%

Base

Base revenue increased $11.2 million during the first quarter of 2018 compared to the first quarter of 2017 primarily due to $10.6 million due to higher usage as a result of colder winter weather and $0.6 million due to higher rates as a result of the annual FRP rate adjustment.

For information on the effects of future energy sales on the results of operations, financial condition, or cash flows of Cleco Power, see Part I, Item 1A, “Risk Factors — Future Electricity Sales” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2017 .

Fuel Cost Recovery/Recoverable Fuel and Power Purchased

Changes in fuel costs historically have not significantly affected Cleco Power’s net income. Generally, fuel and purchased power expenses are recovered through the LPSC-established FAC, which enables Cleco Power to pass on to its customers substantially all such charges. Approximately 74% of Cleco Power’s total fuel cost during the first quarter of 2018 was regulated by the LPSC. Recovery of FAC costs is subject to periodic fuel audits by the LPSC which may result in a refund to customers. Generally, fuel and purchased power expenses are impacted by customer usage, the per unit cost of fuel used for electric generation, and the dispatch of Cleco Power’s generating facilities by MISO. Fuel and purchased power expenses were also impacted by the interruption of the continuous supply of lignite due to adverse weather conditions and other factors that disrupted mining operations and transportation to Dolet Hills Power Station. For more information on fuel audits, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 12 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Fuel Audit.”

Electric Customer Credits

Electric customer credits increased $7.2 million during the first quarter of 2018 compared to the first quarter of 2017 primarily due to accrued estimated refunds for the federal tax-related benefits for the TCJA. For more information on the TCJA, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 8 — Income Taxes .”

Other Operations Revenue

Other operations revenue increased $5.8 million during the first quarter of 2018 compared to the first quarter of 2017 primarily due to $3.2 million of net generation revenue from SSR payments, $2.3 million of higher revenue from wholesale customers due to the absence of issuing customer credits relating to the MISO ROE complaints, $0.4 million of higher reconnect fees, and $0.2 million of higher net transmission and distribution revenue. These increases were partially offset by $0.3 million for the amortization of the emergency declarations regulatory asset. For more information on the SSR, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 10 — Regulation and Rates — SSR.”

Non-recoverable Fuel and Power Purchased

Non-recoverable fuel and power purchased increased $2.3 million during the first quarter of 2018 compared to the first quarter of 2017 primarily due to the absence of a $2.3 million refund from MISO for wholesale customers relating to the MISO ROE complaints, $1.4 million of MISO SSR net transmission expenses, and $0.2 million of higher miscellaneous expenses.



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

These increases were partially offset by $1.6 million of lower net MISO transmission expenses primarily due to lower rates. For more information on the SSR, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 10 — Regulation and Rates — SSR.”

Other Operations Expense

Other operations expense decreased $3.0 million during the first quarter of 2018 compared to the first quarter of 2017 primarily due to $1.5 million of lower salaries expenses, $1.0 million of lower customer service expenses, $0.9 million for the absence of the write-off of an uncollectible account, and $0.7 million of higher capitalized administrative and general expenses. These decreases were partially offset by $0.6 million of higher generation operations expenses, $0.4 million of higher employee benefit expenses, and $0.1 million of higher other operations expenses.

Maintenance

Maintenance expense increased $4.7 million during the first quarter of 2018 compared to the first quarter of 2017 primarily due to $5.3 million of higher net generating station outage and routine maintenance expenses and $0.1 million of higher transmission routine maintenance expenses. These increases were partially offset by $0.4 million of lower distribution routine maintenance expenses, and $0.3 million of lower administrative and general maintenance expenses.

Depreciation and Amortization

Depreciation and amortization expense increased $1.6 million during the first quarter of 2018 compared to the first quarter of 2017 primarily due to $1.1 million for normal reoccurring additions to fixed assets and $1.0 million of higher amortization of storm damages, which is based on collections from customers. These increases were partially offset by $0.3 million of lower amortization of a regulatory asset related to state corporate franchise taxes and $0.2 million of lower miscellaneous amortization.

Allowance for Equity Funds Used During Construction

Income Taxes

Federal and state income tax expense decreased $1.9 million during the first quarter of 2018 compared to the first quarter of 2017 primarily due to $3.1 million for adjustments related to the TCJA, $1.3 million for the flowthrough of state tax benefits, and $0.5 million for adjustments for permanent tax differences. These decreases were partially offset by $1.8 million for the change in pretax income, excluding AFUDC equity, and $1.2 million to record tax expense at the projected annual effective tax rate.

The effective income tax rate for the first quarter of 2018 and 2017 was 23.5% and 35.6% , respectively. The estimated annual effective income tax rate used during the first quarter of 2018 and 2017 for Cleco Power may not be indicative of the full-year income tax rate.

FINANCIAL CONDITION

Liquidity and Capital Resources

General Considerations and Credit-Related Risks

Credit Ratings and Counterparties

Financing for operational needs and capital expenditure requirements not satisfied by operating cash flows depends upon the cost and availability of external funds through both short- and long-term financing. The inability to raise capital on favorable terms could negatively affect Cleco’s ability to maintain or expand its businesses. Access to funds is dependent upon factors such as general economic and capital market conditions, regulatory authorizations and policies, Cleco Holdings’ and Cleco Power’s credit ratings, cash flows from routine operations, and credit ratings of project counterparties. After assessing the current operating performance, liquidity, and credit ratings of Cleco Holdings and Cleco Power, management believes that Cleco will have access to the capital markets at prevailing market rates for companies with comparable credit ratings. The following table presents the credit ratings of Cleco Holdings and Cleco Power at March 31, 2018 :



	SENIOR UNSECURED DEBT		CORPORATE CREDIT
	MOODY’S	S&P	S&P
Cleco Holdings	Baa3	BBB-	BBB-
Cleco Power	A3	BBB+	BBB+

On February 7, 2018, taking into consideration the pending NRG South Central acquisition, Moody’s placed Cleco Holdings’ Baa3 credit rating on review for downgrade and affirmed Cleco Power at A3 (stable). Also on February 7, 2018, S&P affirmed Cleco Holdings’ and Cleco Power’s credit ratings at BBB- (stable) and BBB+ (stable), respectively. On April 7, 2018, Moody’s published a credit rating update that resulted in no change to the credit ratings or outlooks of Cleco Holdings or Cleco Power.

Cleco notes that credit ratings are not recommendations to buy, sell, or hold securities and may be subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating.

Cleco Holdings’ and Cleco Power pay fees and interest under their bank credit agreements based on the highest rating held. Savings are dependent upon the level of borrowings. If Cleco Holdings’ or Cleco Power’s credit ratings were to be downgraded by S&P or Moody’s, Cleco Holdings and/or Cleco Power would be required to pay additional fees and incur higher interest rates for borrowings under their respective credit facilities.

With respect to any open power or natural gas trading positions that Cleco Power may initiate in the future, Cleco Power may be required to provide credit support or pay liquidated damages. The amount of credit support that Cleco Power may be required to provide at any point in the future is dependent on the amount of the initial transaction, changes in the market price of power and natural gas, changes in open power and gas positions, and changes in the amount counterparties owe Cleco Power. Changes in any of these factors could cause the amount of requested credit support to increase or decrease.



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CLECO POWER		2018 1ST QUARTER FORM 10-Q

Cleco Power participates in the MISO market, which operates a fully functioning RTO market with two major market processes: the Day-Ahead Energy and Operating Reserves Market and the Real-Time Energy and Operating Reserves Market. Both use market-based mechanisms to manage transmission congestion across the MISO market area. MISO requires Cleco Power to provide credit support which may increase or decrease due to the timing of the settlement schedules. At March 31, 2018 , Cleco Power had a $2.0 million letter of credit to MISO pursuant to the credit requirements of FTRs. The letter of credit automatically renews each year. For information about MISO, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Transmission Rates of Cleco Power” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

Global and U.S. Economic Environment

Global and domestic economic conditions may have an impact on Cleco’s business and financial condition. Access to capital markets is a significant source of funding for both short- and long-term capital requirements not satisfied by operating cash flows. During periods of capital market volatility, the availability of capital could be limited and the costs of capital may increase for many companies. Although the Registrants have not experienced restrictions in the financial markets, their ability to access the capital markets may be restricted at a time when the Registrants would like, or need, to do so. Any restrictions could have a material impact on the Registrants’ ability to fund capital expenditures or debt service, or on their flexibility to react to changing economic and business conditions. Credit constraints could have a material negative impact on the Registrants’ lenders or customers, causing them to fail to meet their obligations to the Registrants or to delay payment of such obligations. The lower interest rates to which the Registrants have been exposed have been beneficial to debt issuances; however, these rates have negatively affected interest income for the Registrants’ short-term investments.

2017 Tax Reform

The TCJA was signed into law on December 22, 2017. The provisions of the law reduce the top federal statutory corporate income tax rate from 35% to 21%, generally allow for 100% bonus depreciation for new and used equipment purchased after September 27, 2017, generally restrict deduction of interest expense to 30% of adjusted taxable EBITDA, and repeal the corporate alternative minimum tax. The regulatory treatment for the change in the statutory corporate income tax rate could decrease Cleco Power’s future retail rates, resulting in lower cash flows. As a result of a request by the LPSC, Cleco Power began accruing an estimated reserve for the change in the tax rates beginning January 1, 2018, and will continue through June 30, 2018. Cleco Power recommended refunding this amount to customers on September 2018 bills based on July 2018 usage, pending LPSC review and approval. At March 31, 2018, Cleco Power had $7.3 million accrued for the estimated federal tax-related benefits from the TCJA. For the period July 1, 2018, to June 30, 2019, Cleco Power has proposed that its annual FRP filing reflect the change in the tax rate. As defined by the TCJA, rate regulated activities are not allowed to utilize 100% bonus depreciation and are not subject to the restricted interest deduction.

At December 31, 2017, Cleco reduced net accumulated deferred income tax assets and liabilities (ADIT) because of the reduction in the income tax rate from 35% to 21%. While activities not subject to cost of service rate regulation record the reduction in accumulated deferred income tax assets and liabilities in income tax expense, Cleco Power is required to recognize a regulatory liability for the portion of the net reduction subject to regulatory treatment.

The Registrants have made a reasonable estimate for the measurement and accounting of certain effects of the TCJA which were reflected in the December 31, 2017, financial statements. The accounting for these provisional items decreased deferred income tax expense for Cleco and Cleco Power by $46.3 million and $14.3 million, respectively, for the year ended December 31, 2017. The TCJA also resulted in a decrease in the accumulated deferred income tax liability for Cleco and Cleco Power by $394.9 million and $362.9 million, respectively, at December 31, 2017. For the three months ended March 31, 2018, there were no adjustments in the accumulated deferred income tax liability related to the TCJA for Cleco or Cleco Power.

Cleco expects current and deferred income tax expense in future periods will be lower than in past periods. Cleco also expects lower cash taxes to be paid for federal income taxes; however, higher income taxes may be paid for state income taxes because of the lower federal income tax deduction.

The reduction to ADIT discussed above, including the effects on income tax expense, regulatory liabilities, and effects on future periods are provisional and subject to change. The accounting is not complete due to the timing of the final passage of the TCJA, the complexity of the TCJA, the complexity of remeasuring ADIT, and the uncertainty of regulatory treatment. Additional analysis of the TCJA, the inventory of items that give rise to temporary differences, and additional analysis of items requiring normalization is required before accounting for the TCJA is considered complete under the authoritative guidance for income taxes. Cleco expects any final adjustments to the provisional amounts to be recorded by the fourth quarter of 2018, which could have a material adverse effect on the results of operations of Cleco. Due to the uncertainty around the regulatory treatment, the entire regulatory liability is reflected in non-current liabilities.

Fair Value Measurements

Various accounting pronouncements require certain assets and liabilities to be measured at their fair values. Some assets and liabilities are required to be measured at their fair value each reporting period, while others are required to be measured only one time, generally the date of acquisition or debt issuance. Cleco and Cleco Power are required to disclose the fair value of certain assets and liabilities by one of three levels. Other financial assets and liabilities are reported at their carrying values at their date of issuance on the consolidated balance sheets with their fair values as of the balance sheet date disclosed within the three levels. For more information about fair value levels, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 5 — Fair Value Accounting.”

Cash Generation and Cash Requirements

Restricted Cash and Cash Equivalents

Various agreements to which Cleco is subject contain covenants that restrict its use of cash. As certain provisions



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CLECO POWER		2018 1ST QUARTER FORM 10-Q

under these agreements are met, cash is transferred out of related escrow accounts and becomes available for its intended purposes and/or general corporate purposes. For more information on Cleco and Cleco Power’s restricted cash and cash equivalents, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Restricted Cash and Cash Equivalents.

Debt

Cleco Consolidated

At March 31, 2018 , and December 31, 2017 , Cleco had no short-term debt outstanding. Cleco Holdings and Cleco Power have uncommitted lines of credit with a bank that allow up to $10.0 million each in short-term borrowings, but no more than $10.0 million in the aggregate, to support their working capital needs.

At March 31, 2018 , Cleco’s long-term debt outstanding was $2.89 billion , of which $19.9 million was due within one year. The long-term debt due within one year at March 31, 2018 , represents principal payments for the Cleco Katrina/Rita storm recovery bonds. For Cleco, long-term debt increased by $38.6 million from December 31, 2017 , primarily due to the issuance of $50.0 million of senior notes on March 26, 2018, and $0.4 million related to debt discount and expense. These increases were partially offset by a $9.7 million scheduled payment made on Cleco Katrina/Rita storm recovery bonds and $2.1 million for amortization of long-term debt fair value adjustments related to the Merger.

On December 18, 2017, Cleco entered into an agreement for the issuance and sale in a private placement of $175.0 million aggregate principal amount of senior notes. For more information, see “— Cleco Power” below.

Cash and cash equivalents available at March 31, 2018 , were $176.5 million combined with $400.0 million credit facility capacity ( $100.0 million from Cleco Holdings and $300.0 million from Cleco Power) for total liquidity of $576.5 million .

At March 31, 2018 , Cleco and Cleco Power were exposed to concentrations of credit risk through their short-term investments classified as cash equivalents. In order to mitigate potential credit risk, Cleco and Cleco Power have established guidelines for short-term investments. For more information on the concentration of credit risk through short-term investments classified as cash equivalents, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 5 — Fair Value Accounting.”

At March 31, 2018 , and December 31, 2017 , Cleco had a working capital surplus of $294.9 million and $271.4 million , respectively. The $23.5 million increase in working capital is primarily due to:


•	a $57.5 million increase in cash and cash equivalents,


•	a $47.1 million decrease in accounts payable, excluding FTR purchases, primarily due to timing of fuel payments and lower accruals for payroll, and


•	an $11.2 million increase in accumulated deferred fuel primarily due to the timing of fuel revenue collections and additional deferrals through a fuel surcharge.

These increases in working capital were partially offset by:


•	a $26.2 million increase in interest primarily due to timing of interest payments on long-term debt,


•	a $14.3 million decrease in fuel inventory primarily due to lower lignite, petroleum coke, and natural gas due to plant operations, partially offset by higher coal purchases,


•	a $14.2 million decrease in customer accounts receivable and unbilled revenue due to a decrease in retail revenue and customer usage,


•	an $11.6 million increase in taxes payable primarily due to accrual of property taxes and provision for income taxes,


•	an $8.1 million decrease in other accounts receivable due to the receipt of an insurance reimbursement, lower receivables from joint owners for maintenance expenses, and timing of the receipt of transmission revenue,


•	a $7.6 million increase in provision for rate refund primarily due to the estimated refund due to retail customers as a result of changes in the tax rates due to TCJA, and


•	a $6.4 million decrease in restricted cash and cash equivalents.

Cleco Holdings (Holding Company Level)

At March 31, 2018 , and December 31, 2017 , Cleco Holdings had no short-term debt outstanding. Cleco Holdings and Cleco Power have uncommitted lines of credit with a bank that allow up to $10.0 million each in short-term borrowings, but no more than $10.0 million in the aggregate, to support their working capital needs.

At March 31, 2018 , Cleco Holding’s long-term debt outstanding was $1.49 billion , none of which was due within one year.

At March 31, 2018 , and December 31, 2017 , Cleco Holdings had no borrowings outstanding under its $100 million credit facility. This credit facility provides for working capital and other financing needs. The credit facility includes restricted financial covenants and expires in 2021.

Cash and cash equivalents available at March 31, 2018 , were $48.3 million , combined with $100.0 million credit facility capacity for total liquidity of $148.3 million .

Cleco Power

At March 31, 2018 , and December 31, 2017 , Cleco Power had no short-term debt outstanding. Cleco Holdings and Cleco Power have uncommitted lines of credit with a bank that allow up to $10.0 million each in short-term borrowings, but no more than $10.0 million in the aggregate, to support their working capital needs.

At March 31, 2018 , Cleco Power’s long-term debt outstanding was $1.40 billion , of which $19.9 million was due within one year. The long-term debt due within one year at March 31, 2018 , represents principal payments for the Cleco Katrina/Rita storm recovery bonds. For Cleco Power, long-term debt increased $40.6 million from December 31, 2017 , primarily due to the issuance of $50.0 million of senior notes on March 26, 2018, and $0.3 million related to debt discount and expense. These increases were partially offset by a $9.7 million scheduled payment made on Cleco Katrina/Rita storm recovery bonds.

At March 31, 2018 , and December 31, 2017 , Cleco Power had no borrowings outstanding under its $300.0 million credit facility. This credit facility provides for working capital and other financing needs. The credit facility includes restricted financial covenants and expires in 2021.



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CLECO POWER		2018 1ST QUARTER FORM 10-Q

On December 18, 2017, Cleco Power entered into an agreement for the issuance and sale in a private placement of $175.0 million aggregate principal amount of senior notes. The senior notes were issued in two tranches. The first tranche was issued on December 18, 2017, with principal amounts of $25.0 million at an interest rate of 2.94% and $100.0 million at an interest rate of 3.08% , with final maturity dates of December 16, 2022, and 2023, respectively. The second tranche was issued on March 26, 2018, with principal amounts of $50.0 million at an interest rate of 3.17% , with a final maturity date of December 16, 2024. The proceeds from the issuance and sale were used for capital investments and general utility purposes.

Cash and cash equivalents available at March 31, 2018 , were $128.2 million , combined with $300.0 million credit facility capacity for total liquidity of $428.2 million .

At March 31, 2018 , and December 31, 2017 , Cleco Power had a working capital surplus of $195.2 million and $169.6 million , respectively. The $ 25.6 million increase in working capital is primarily due to:


•	a $58.4 million increase in cash and cash equivalents,


•	a $41.9 million decrease in accounts payable, excluding FTR purchases, primarily due to timing of fuel payments and lower accruals for payroll, and


•	an $11.2 million increase in accumulated deferred fuel primarily due to the timing of fuel revenue collections and additional deferrals through a fuel surcharge.

These increases in working capital were partially offset by:


•	a $15.6 million increase in interest primarily due to timing of interest payments on long-term debt,


•	a $14.3 million decrease in fuel inventory primarily due to lower lignite, petroleum coke, and natural gas due to plant operations, partially offset by higher coal purchases,


•	a $14.2 million decrease in customer accounts receivable and unbilled revenue due to a decrease in retail revenue and customer usage,


•	a $13.6 million increase in taxes payable primarily due to accrual of property taxes and provision for income taxes,


•	an $8.4 million decrease in other accounts receivable due to the receipt of an insurance reimbursement, lower receivables from joint owners for maintenance expenses, and timing of the receipt of transmission revenue,


•	a $7.6 million increase in provision for rate refund primarily due to the estimated refund due to retail customers as a result of changes in the tax rates due to TCJA, and


•	a $6.4 million decrease in restricted cash and cash equivalents.

Credit Facilities

At March 31, 2018 , Cleco Holdings had a $100.0 million credit facility. The credit facility includes restricted financial covenants and expires in 2021. At March 31, 2018 , Cleco Holdings was in compliance with the covenants of its credit facility. The borrowing costs under Cleco Holdings’ credit facility are equal to LIBOR plus 1.75% or ABR plus 0.75%, plus commitment fees of 0.275%. If Cleco Holdings’ credit ratings were to be downgraded one level by either agency, Cleco Holdings would be required to pay higher fees and additional interest of 0.075% and 0.50%, respectively, under the pricing levels of its credit facility.

At March 31, 2018 , Cleco Power had a $300.0 million credit facility. The credit facility includes restricted financial

covenants and expires in 2021. At March 31, 2018 , Cleco Power was in compliance with the covenants of its credit facility. The borrowing costs under Cleco Power’s credit facility are equal to LIBOR plus 1.125% or ABR plus 0.125%, plus commitment fees of 0.125%. If Cleco Power’s credit ratings were to be downgraded one level by either agency, Cleco Power would be required to pay higher fees and additional interest of 0.05% and 0.125%, respectively, under the pricing levels of its credit facility.

If Cleco Holdings or Cleco Power were to default under the covenants in their respective credit facilities or other debt agreements, they would be unable to borrow additional funds under the facilities and the lenders could accelerate all principal and interest outstanding. Further, if Cleco Power were to default under its credit facility or other debt agreements, Cleco Holdings would be considered in default under its credit facility.

Debt Limitations

The Merger Commitments include provisions limiting the amount of distributions that can be made from Cleco Holdings to Cleco Group or Cleco Partners, depending on Cleco Holdings’ debt to EBITDA ratio and its corporate credit ratings. Additionally, in accordance with the Merger Commitments, Cleco Power is subject to certain provisions limiting the amount of distributions that may be paid to Cleco Holdings, depending on Cleco Power’s common equity ratio and its corporate credit ratings. The Merger Commitments also prohibit Cleco from incurring additional long-term debt, excluding non-recourse debt, unless certain financial ratios are achieved. At March 31, 2018 , and December 31, 2017 , Cleco Holdings and Cleco Power were in compliance with the provisions of the Merger Commitments that could restrict the amount of distributions available. For more information on the Merger Commitments, see Part I, Item 1A, “Risk Factors — Regulatory Compliance” and “— Holding Company” in the Registrants’ Combined Annual Report on Form 10-K for the year ended December 31, 2017.

Cleco Consolidated Cash Flows

Net Operating Cash Flow

Net cash provided by operating activities was $88.0 million and $74.8 million during the three months ended March 31, 2018 , and 2017 , respectively. Net cash provided by operating activities increased $13.2 million primarily due to:


•	lower payments for fuel inventory of $20.6 million primarily due to lower deliveries of lignite and petroleum coke,


•	lower payments for property taxes of $12.9 million due to timing of the payments,


•	higher receipts of $6.4 million for accounts receivable primarily due to timing of receipts of joint owners’ portion of generating station expenditures,


•	higher receipts of $2.8 million for advanced deposits for operations and maintenance costs on jointly-owned generating units, and


•	higher collections from customers of $2.7 million due to lower Merger credits issued.



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CLECO POWER		2018 1ST QUARTER FORM 10-Q

These increases were partially offset by:


•	higher payments of $26.9 million to vendors for power purchases and fuel costs and


•	lower net fuel and power purchase collections of $8.4 million primarily due to timing of collections.

Net Investing Cash Flow

Net cash used in investing activities was $57.7 million and $46.9 million during the three months ended March 31, 2018 , and 2017 , respectively. Net cash used in investing activities increased $10.8 million primarily due to higher payments for additions to property, plant, and equipment, net of AFUDC, of $14.8 million.

This increase was partially offset by:


•	higher return of investment in the NMTC fund of $2.3 million and


•	receipts of insurance reimbursements for property loss of $1.1 million.

Net Financing Cash Flow

Net cash provided by financing activities was $20.1 million during the three months ended March 31, 2018 . Net cash used in financing activities was $38.2 million during the three months ended March 31, 2017 . Net cash provided by financing activities increased $58.3 million primarily due to:


•	issuance of long-term debt of $50.0 million and


•	lower distributions to Cleco Group of $9.5 million.

Cleco Power Cash Flows

Net Operating Cash Flow

Net cash provided by operating activities was $99.3 million and $81.2 million during the three months ended March 31, 2018 , and 2017 , respectively. Net cash provided by operating activities increased $18.1 million primarily due to:


•	lower payments for fuel inventory of $20.6 million primarily due to lower deliveries of lignite and petroleum coke,


•	lower payments for property taxes of $13.2 million due to timing of the payments,


•	higher receipts of $6.4 million for accounts receivable primarily due to timing of receipts of joint owners’ portion of generating station expenditures,


•	higher receipts of $2.8 million for advanced deposits for operations and maintenance costs on jointly-owned generating units, and


•	higher collections from customers of $2.7 million due to lower Merger credits issued.

These increases were part i ally offset by:


•	higher payments of $24.1 million to vendors for power purchases and fuel costs and


•	lower net fuel and power purchase collections of $8.4 million primarily due to timing of collections.

Net Investing Cash Flow

Net cash used in investing activities was $59.7 million and $45.6 million during the three months ended March 31, 2018 , and 2017 , respectively. Net cash used in investing activities

increased $14.1 million primarily due to higher additions to property, plant, and equipment, net of AFUDC, of $15.1 million. This increase was partially offset by receipts of insurance reimbursements for property loss of $1.1 million.

Net Financing Cash Flow

Net cash provided by financing activities was $11.6 million during the three months ended March 31, 2018 . Net cash used in financing activities was $44.7 million during the three months ended March 31, 2017 . Net cash provided by financing activities increased $56.3 million primarily due to:


•	issuance of long-term debt of $50.0 million and


•	lower distributions to Cleco Holdings of $7.0 million.

Contractual Obligations

Cleco, in the normal course of business activities, enters into a variety of contractual obligations. Some of these result in direct obligations that are reflected in Cleco’s Condensed Consolidated Balance Sheets while others are commitments, some firm and some based on uncertainties, that are not reflected in the Condensed Consolidated Financial Statements.

For more information regarding Cleco’s Contractual Obligations, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Contractual Obligations” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2017 .

Off-Balance Sheet Commitments and Guarantees

Cleco Holdings and Cleco Power have entered into various off-balance sheet commitments, in the form of guarantees and standby letters of credit, in order to facilitate their activities and the activities of Cleco Holdings’ subsidiaries and equity investees (affiliates). Cleco Holdings and Cleco Power have also agreed to contractual terms that require them to pay third parties if certain triggering events occur. These contractual terms generally are defined as guarantees. For more information about off-balance sheet commitments and on-balance sheet guarantees, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 12 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Off-Balance Sheet Commitments and Guarantees.”

Regulatory and Other Matters

Environmental Matters

Cleco is subject to extensive environmental regulation by federal, state, and local authorities and is required to comply with numerous environmental laws and regulations, and to obtain and comply with numerous governmental permits, in operating its facilities. In addition, existing environmental laws, regulations, and permits could be revised or reinterpreted; new laws and regulations could be adopted or become applicable to Cleco or its facilities; and future changes in environmental laws and regulations could occur, including potential regulatory and enforcement developments related to air emissions. Cleco may incur significant additional costs to comply with these revisions, reinterpretations, and requirements. Cleco Power would then seek recovery of additional environmental compliance costs as riders through the LPSC’s EAC or its FRP. If Cleco fails to comply with these



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CLECO POWER		2018 1ST QUARTER FORM 10-Q

revisions, reinterpretations, and requirements, it could be subject to civil or criminal liabilities and fines.

For a discussion of other Cleco environmental matters, see Part I, Item 1, “Business — Environmental Matters” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2017 .

Retail Rates of Cleco Power

Fuel Rates

Generally, the cost of fuel used for electric generation and the cost of power purchased for utility customers are recovered through the LPSC-established FAC, that enables Cleco Power to pass on to its customers substantially all such charges. Recovery of FAC costs is subject to periodic fuel audits by the LPSC. For more information on the FAC and the current fuel audit, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 12 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Fuel Audit.”

Environmental Rates

In July 2009, the LPSC issued Docket No. U-29380 Subdocket A, which provides for an EAC to recover from customers certain costs of environmental compliance. These expenses are eligible for recovery through Cleco Power’s EAC and are subject to periodic review by the LPSC. For more information on the EAC, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 12 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — LPSC Audits — Environmental Audit.”

SSR

Cleco Power is currently operating Teche Unit 3 as an SSR unit as designated by MISO. For more information on the MISO SSR designation of Teche Unit 3, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 10 — Regulation and Rates — SSR.”

Energy Efficiency

In 2013, the LPSC issued a General Order adopting rules promoting energy efficiency programs. The order addressed two energy efficiency programs, Phase I and Phase II. Phase I, known as the Quick Start program, was a three-year program to expedite the energy efficiency implementation and was expected to develop into Phase II, a more detailed and comprehensive program. Cleco Power participated in the Phase I program beginning in November 2014 for three years and designed several energy efficiency programs for customers. In January 2017, the LPSC amended the third year of the Phase I program to allocate no less than 50% of its annual program budgets to applicable government and state agencies. Beginning in November 2014, Cleco Power recovered approximately $3.3 million annually for each of the three program years through an approved rate tariff.

In September 2017, the LPSC extended Phase I for an additional year. Cleco Power began recovery of approximately $3.3 million for estimated costs for the fourth program year beginning January 1, 2018. Also in September 2017, the LPSC approved a motion for additional energy efficiency program funds for the exclusive benefit of school districts, local governments, state agencies, and higher education institutions or any other public entities (political subdivision). The recovery

of approximately $3.3 million annually for estimated costs for the political subdivision program began on January 1, 2018.

In November 2017, the LPSC initiated an audit on the first two program years to consider all program costs. Cleco Power responded to the two sets of data requests on February 5, 2018, and April 20, 2018. Management is unable to predict or give a reasonable estimate of the outcome of the audit.

MISO Cost Benefit Analysis

Cleco Power entered into MISO in 2013. Within five years of joining MISO, the LPSC required Cleco Power to conduct a study of the costs and benefits of its membership in MISO. During the second quarter of 2017, Cleco Power submitted an analysis with both a backward-looking, historical analysis and a forward-looking, prospective analysis of the costs and benefits of operating in MISO, as compared to a scenario where Cleco Power and Entergy Louisiana exit MISO and operate independently. Cleco Power’s analysis indicated that continued MISO membership would best serve the public interest. Cleco Power has responded to four sets of data requests on the analysis. Management is unable to predict the outcome of this analysis or give a reasonable estimate of the possible range of disallowance of costs, if any.

Wholesale Rates of Cleco Power

The rates Cleco Power charges its wholesale customers are subject to FERC’s triennial market power analysis. FERC requires a utility to pass a screening test as a condition for securing and/or retaining approval to sell electricity in wholesale markets at market-based rates. An updated market power analysis must be filed with FERC every three years or upon the occurrence of a change in status as defined by FERC regulation. Cleco filed its triennial market power analysis with FERC in December 2017. Cleco Power expects a determination from FERC in the second quarter of 2018. Management is unable to predict the outcome of this filing. If FERC determines Cleco Power possesses generation market power in excess of certain thresholds, Cleco Power could lose the right to sell wholesale generation at market-based rates, which could result in a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

Transmission Rates of Cleco Power

In May 2017, Cleco Power filed a MISO Schedule 2 rate increase request with FERC. MISO Schedule 2 provides for compensation to Cleco Power for providing reactive power to MISO customers. On July 1, 2017, Cleco Power began collecting revenue at the requested rate, subject to refund. On December 1, 2017, a new rate became effective. FERC approved this rate on February 1, 2018. At March 31, 2018, Cleco had $0.1 million accrued, including accrued interest, for the amount over-collected in 2017. Cleco refunded this amount in April 2018.

Two complaints were filed with FERC seeking to reduce the ROE component of the transmission rates that MISO transmission owners, including Cleco, may collect under the MISO tariff. For more information about the ROE complaints, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 12 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation — Transmission ROE.”

For information about the risks associated with Cleco Power’s participation in MISO, see Part I, Item 1A, “Risk



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

Factors — MISO” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

For information on transmission rates of Cleco Power, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Transmission Rates of Cleco Power” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

Transmission and Generation Projects

Cleco Power is currently involved in the Terrebonne to Bayou Vista Transmission project. Cleco Power is also involved in the St. Mary Clean Energy Center project, which is a waste heat generating unit, and the Coughlin Pipeline project. For information on these projects, see “— Overview — Cleco Power.”

Market Restructuring

Wholesale Electric Markets

RTO

For information on Cleco Power’s operations within MISO and for information on regulatory aspects of wholesale electric markets affecting Cleco, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Market Restructuring — Wholesale Electric Markets” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2017 .

ERO

The Energy Policy Act of 2005 added Section 215 to the Federal Power Act, which provides for a uniform system of mandatory, enforceable reliability standards. In 2006, FERC named NERC as the ERO that will be required to develop and enforce the mandatory reliability standards.

In July 2017, the SPP RTO’s board of directors and members committee voted to authorize the SPP’s President and CEO to terminate the delegation agreement between the SPP and NERC, which will effectively dissolve the SPP RE by the end of 2018. On February 8, 2018, NERC approved Cleco Power’s proposed RE. On March 5, 2018, NERC, Midwest Reliability Organization (MRO), and SERC Reliability Corporation (SERC) filed a joint petition with FERC for approvals in connection with the termination of the regional delegation agreement with the SPP RE. NERC, MRO, and SERC requested that FERC consider this petition on an expedited basis to allow the issuance of an order on this proceeding within 60 days of the date of this filing. NERC, SERC, and SPP RE have engaged in preliminary activities involving the transfer of files, documents, and other information necessary for SERC to assume the delegated authority for Cleco Power by July 1, 2018. Management does not expect this termination to have a significant impact on the results of operations, financial condition, or cash flows of the Registrants.

A NERC Reliability Standards audit is conducted every three years. Cleco Power’s next NERC Reliability Standards audit is scheduled to begin in 2019.

A NERC Critical Infrastructure Protection audit is also conducted every three years. A NERC Critical Infrastructure Protection audit was conducted in February 2017. There were

three violations associated with the February 2017 audit. Cleco Power has completed the mitigation plans for the three violations. The SPP RE has not completed their analysis of the violations. Cleco Power’s next NERC Critical Infrastructure Protection audit is scheduled to begin in 2020. Management is unable to predict the final outcome of the current audit, or any future audits, or whether any findings will have a material adverse effect on the results of operations, financial condition, or cash flows of the Registrants.

For a discussion of risks associated with FERC’s regulation of Cleco Power’s transmission system, see Part I, Item 1A, “Risk Factors — Reliability and Infrastructure Protection Standards Compliance” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2017 .

Retail Electric Markets

For information on the regulatory aspects of retail electric markets affecting Cleco Power, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Market Restructuring — Retail Electric Markets” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2017 .

Lignite Deferral

At March 31, 2018 , and December 31, 2017 , Cleco Power had $3.2 million and $3.8 million , respectively, in uncollected deferred lignite mining costs.

For more information on Cleco Power’s deferred lignite mining expenditures, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Regulatory and Other Matters — Lignite Deferral” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2017 .

Integrated Resource Plan (IRP)

In accordance with the General Order in LPSC Docket No. R-30021, on October 20, 2017, Cleco Power filed a request with the LPSC to initiate an IRP process. On February 20, 2018, Cleco Power filed the data assumptions to be used in its IRP analysis. The IRP process includes conducting stakeholder meetings and receiving feedback from stakeholders. The first stakeholder meeting was held on April 5, 2018. Comments from the stakeholders are due to Cleco Power by June 5, 2018. The schedule outlined in the General Order calls for Cleco Power to file a draft IRP in January 2019, and a final report filed in August 2019.

Franchises

Cleco Power operates under nonexclusive franchise rights granted by governmental units, such as municipalities and parishes (counties), and enforced by state law. Cleco Power’s next municipal franchise expires in July 2021.

For more information on franchises, see Part I, Item 1, “Business Regulatory Matters, Industry Developments, and Franchises — Franchises” in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2017 .



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

Recent Authoritative Guidance

For a discussion of recent authoritative guidance, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 3 — Recent Authoritative Guidance.”

CRITICAL ACCOUNTING POLICIES

Cleco’s critical accounting policies include accounting policies that are important to Cleco’s financial condition and results of operations and that require management to make difficult, subjective, or complex judgments about future events, which could result in a material impact to the financial statements of Cleco. The preparation of financial statements contained in this report requires management to make estimates and assumptions. Estimates and assumptions about future events and their effects cannot be made with certainty. These estimates involve judgments regarding many factors that in and of themselves could materially affect the financial statements and disclosures. On an ongoing basis, these estimates and assumptions are evaluated and, if necessary, adjustments are made when warranted by new or updated information or by a change in circumstances or environment. Actual results may differ significantly from these estimates under different assumptions or conditions.

For more information on Cleco’s critical accounting policies, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” in the Registrant’s Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2017 .

CLECO POWER — NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

Cleco Power meets the conditions specified in General Instructions H(1)(a) and (b) to Form 10-Q and is, therefore, permitted to use the reduced disclosure format for wholly owned subsidiaries of reporting companies. Accordingly, Cleco Power has omitted from this report the information called for by Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) and Item 3 (Quantitative and Qualitative Disclosures about Market Risk) of Part I of Form 10-Q and the following Part II items of Form 10-Q: Item 2 (Unregistered Sales of Equity Securities and Use of Proceeds) and Item 3 (Defaults upon Senior Securities).

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Risk Overview

Cleco evaluates derivatives and hedging activities to determine whether market risk-sensitive instruments and positions are required to be marked-to-market. When positions close, actual gains or losses are included in the FAC and reflected on customers’ bills as a component of the FAC.

Cleco’s exposure to market risk, as discussed below, represents an estimate of possible changes in the fair value or future earnings that would occur, assuming possible future movements in the interest rates and commodity prices of power, FTRs, and natural gas. Management’s views on market risk are not necessarily indicative of actual results, nor do they represent the maximum possible gains or losses. The views do represent, within the parameters disclosed, what management estimates may happen.

Cleco maintains a master netting agreement policy and monitors credit risk exposure through reviews of counterparty credit quality, aggregate counterparty credit exposure, and aggregate counterparty concentration levels. Cleco manages these risks by establishing appropriate credit and concentration limits on transactions with counterparties and requiring contractual guarantees, cash deposits, or letters of credit from counterparties or their affiliates, as deemed necessary. Cleco Power has agreements in place with various counterparties that authorize the netting of financial buys and sells and contract payments to mitigate credit risk for transactions entered into for risk management purposes.

Access to capital markets is a significant source of funding for both short- and long-term capital requirements not satisfied by operating cash flows. Future actions or inactions of the federal government, including a failure to increase the

government debt limit, could increase the actual or perceived risk that the U.S. may not pay its obligations when due and may disrupt financial markets, including capital markets, potentially limiting availability and increasing costs of capital. The inability to raise capital on favorable terms could negatively affect Cleco’s ability to maintain and expand its businesses. After assessing the current operating performance, liquidity, and credit ratings of Cleco Holdings and Cleco Power, management believes that Cleco will have access to the capital markets at prevailing market rates for companies with comparable credit ratings. Cleco Holdings and Cleco Power pay fees and interest under their respective credit facilities based on the highest rating held. On February 7, 2018, taking into consideration the pending NRG South Central acquisition, Moody’s placed Cleco Holdings’ Baa3 credit rating on review for downgrade and affirmed Cleco Power at A3 (stable). Also on February 7, 2018, S&P affirmed Cleco Holdings’ and Cleco Power’s credit ratings at BBB- (stable) and BBB+ (stable), respectively. On April 7, 2018, Moody’s published a credit rating update that resulted in no change to the credit ratings or outlooks of Cleco Holdings or Cleco Power. If Cleco Holdings’ or Cleco Power’s credit ratings were to be downgraded by S&P or Moody’s, Cleco Holdings and/or Cleco Power would be required to pay additional fees and incur higher interest rates for borrowings under their respective credit facilities.

Interest Rate Risks

Cleco monitors its mix of fixed- and variable-rate debt obligations in light of changing market conditions and from time to time may alter that mix, for example, refinancing balances outstanding under its variable-rate credit facility with fixed-rate debt. Calculations of the changes in fair market value and interest expense of the debt securities are made over a one-year period.



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

Sensitivity to changes in interest rates for variable-rate obligations is computed by assuming a 1% change in the current interest rate applicable to such debt.

At March 31, 2018 , Cleco Holdings had no variable-rate debt outstanding under its $100.0 million credit facility. The borrowing costs under Cleco Holdings’ credit facility are equal to LIBOR plus 1.75% or ABR plus 0.75%, plus commitment fees of 0.275%.

At March 31, 2018 , Cleco Holdings had a $300.0 million long-term variable rate bank term loan outstanding. Amounts outstanding under the bank term loan bear interest at LIBOR plus 1.625%. At March 31, 2018 , the all-in rate was 3.42 %. Each 1% increase in the interest rate applicable to such debt would result in a decrease in Cleco Holdings’ pretax earnings of $3.0 million.

For information on variable-rate debt related to Cleco Power, please refer to “— Cleco Power.”

Commodity Price Risks

Management believes Cleco has controls in place to minimize the risks involved in its financial and energy commodity activities. Independent controls over energy commodity functions consist of a middle office (risk management), a back office (accounting), and regulatory compliance staff. All forward commodity positions have established risk limits and are monitored through a daily market report that identifies the VaR, current market conditions, and concentration of energy market positions.

Cleco Power provides fuel for generation and purchases power to meet the power demands of customers. Cleco Power may enter into positions to mitigate the volatility in customer fuel costs, as encouraged by various LPSC orders. These positions would be marked-to-market with the resulting gain or loss recorded on the balance sheet as a component of the accumulated deferred fuel asset or liability and a component of the energy risk management assets or liabilities. When these positions close, actual gains or losses would be included in the FAC and reflected in customers’ bills as a component of the fuel charge. There were no open natural gas positions at March 31, 2018 . Cleco Power is currently working with the LPSC to establish a natural gas hedging pilot program. For more information on the program, see Item 1, “Notes to Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Risk Management.”

Cleco Power purchases FTRs in auctions facilitated by MISO. The majority of its FTRs are purchased in annual auctions during the second quarter, but Cleco Power may purchase additional FTRs in monthly auctions. FTRs are derivative instruments which represent economic hedges of future congestion charges that will be incurred in serving Cleco Power’s customer load. FTRs are not designated as hedging instruments for accounting purposes. Cleco Power records FTRs at their estimated fair value when purchased. Each accounting period, Cleco Power adjusts the carrying value of FTRs to their estimated fair value based on the most recent MISO FTR auction prices. Unrealized gains or losses on FTRs held by Cleco Power are included in Accumulated deferred fuel on Cleco Power’s Condensed Consolidated Balance Sheets. Realized gains or losses on settled FTRs are recorded in Fuel used for electric generation on Cleco Power’s Condensed Consolidated Statements of Income. At March 31, 2018 , Cleco Power’s Condensed Consolidated Balance Sheets reflected open FTR positions of $4.8 million in Energy risk management assets and $0.5 million in Other current liabilities. For more information on FTRs, see Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 5 — Fair Value Accounting — Commodity Contracts.”

Cleco Power

Please refer to “— Risk Overview” for a discussion of market risk inherent in Cleco Power’s market risk-sensitive instruments.

Cleco Power may enter into various fixed- and variable-rate debt obligations. Please refer to “— Interest Rate Risks” for a discussion of how Cleco Power monitors its mix of fixed- and variable-rate debt obligations and the manner of calculating changes in fair market value and interest expense of its debt obligations.

At March 31, 2018 , Cleco Power had no variable-rate debt outstanding and no debt outstanding under its $300.0 million credit facility. The borrowing costs under the Cleco Power credit facility are equal to LIBOR plus 1.125% or ABR plus 0.125%, plus commitment fees of 0.125%.

Please refer to “— Commodity Price Risks” for a discussion of controls, transactions, VaR, and market value maturities associated with Cleco Power’s energy commodity activities.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of Cleco Holdings and Cleco Power (individually, “Registrant” and collectively, the “Registrants”) management, including the CEO and CFO, the Registrants have evaluated the effectiveness of their disclosure controls and procedures as of March 31, 2018 . Based on the evaluations, the CEO and CFO have concluded that the Registrants’ disclosure controls and procedures are effective to ensure that information required to be disclosed by each Registrant in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms; and that the Registrants’ disclosure

controls and procedures are also effective in ensuring that such information is accumulated and communicated to the Registrants’ management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in the Registrants’ internal control over financial reporting that occurred during the quarter ended March 31, 2018 , that have materially affected, or are reasonably likely to materially affect, the Registrants’ internal control over financial reporting.



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

CLECO

For information on legal proceedings affecting Cleco, see Part I, Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 12 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation.”

CLECO POWER

For information on legal proceedings affecting Cleco Power, see Part I, Item 1, “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 12 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Litigation.”

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors disclosed in Part I, Item 1A. “Risk Factors in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (the “2017 Annual Report on Form 10-K”). For risks that could affect actual results and cause

results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Registrants, see the risk factors disclosed under Park I, Item 1A, “Risk Factors” of the 2017 Annual Report on Form 10-K.

ITEM 4. MINE SAFETY DISCLOSURES

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

and Item 104 of Regulation S-K is included in Exhibit 95 to this Combined Quarterly Report on Form 10-Q.



ITEM 6. EXHIBITS

CLECO
2.1*	Purchase and Sale Agreement dated as of February 6, 2018 by and between NRG Energy, Inc., a Delaware Corporation, as Seller, NRG South Central Generating LLC, a Delaware limited liability company, as the Company and Cleco Energy LLC, a Louisiana limited liability company, as Purchaser
12(a)	Computation of Ratios of Earnings to Fixed Charges
31.1	CEO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
31.2	CFO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
32.1	CEO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
32.2	CFO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
95	Mine Safety Disclosures
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

CLECO POWER
12(b)	Computation of Ratios of Earnings to Fixed Charges
31.3	CEO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
31.4	CFO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
32.3	CEO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
32.4	CFO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
95	Mine Safety Disclosures
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

* Certain schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule will be furnished supplementally with the SEC upon request provided; however, Cleco Corporate Holdings LLC may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedules so furnished.



CLECO
CLECO POWER		2018 1ST QUARTER FORM 10-Q

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	CLECO CORPORATE HOLDINGS LLC
	(Registrant)

	By:	/s/ F. Tonita Laprarie
		F. Tonita Laprarie
		Controller and Chief Accounting Officer

Date: May 2, 2018

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	CLECO POWER LLC
	(Registrant)

	By:	/s/ F. Tonita Laprarie
		F. Tonita Laprarie
		Controller and Chief Accounting Officer

Date: May 2, 2018

Exhibit 2.1

Execution Version

PURCHASE AND SALE AGREEMENT

dated as of February 6, 2018

by and between

NRG Energy, Inc.,

a Delaware Corporation, as Seller,

NRG SOUTH CENTRAL GENERATING LLC,

a Delaware limited liability company, as the Company

and

CLECO ENERGY LLC,

a Louisiana limited liability company, as Purchaser,

TABLE OF CONTENTS

Page


ARTICLE 1 DEFINITIONS, INTERPRETATION	2


1.01	Definitions 2


1.02	Interpretation. 17


ARTICLE 2 SALE OF MEMBERSHIP INTERESTS AND CLOSING	18


2.01	Purchase and Sale 18


2.02	Payment of Purchase Price 18


2.03	Closing. 18


2.04	Aggregate Net Working Capital Adjustment Amount 19

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER AND THE

COMPANY 21


3.01	Existence 22


3.02	Authority 22


3.03	No Consent 22


3.04	No Conflicts 22


3.05	Regulatory Matters 22


3.06	Legal Proceedings 23


3.07	Brokers 23


3.08	Compliance with Laws 23


3.09	The Company and the Subsidiaries. 23


3.10	No Undisclosed Liabilities 24


3.11	Taxes 25


3.12	The Company Contracts. 27


3.13	Real Property 27


3.14	Title 28


3.15	Environmental 28


3.16	Permits 30


3.17	Affiliate Transactions 30


3.18	Intellectual Property. 30


3.19	Insurance 31


3.20	Financial Statements 31

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TABLE OF CONTENTS

(continued)

Page


3.21	Absence of Certain Changes 32


3.22	Regulatory Status 32


3.23	Support Obligations 32


3.24	Employee and Benefit Matters 33


3.25	Bankruptcy 36


3.26	No Debt 36


3.27	Warranties 36


3.28	Inventory 36


3.29	Projects Condition 36


3.30	Anti-Terrorism Laws 37


3.31	Foreign Corrupt Practices Act and Certain Payments 37


3.32	No Other Warranties 38


ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASER	38


4.01	Existence 38


4.02	Authority 39


4.03	No Consent 39


4.04	No Conflicts 39


4.05	Permits and Filings 39


4.06	Legal Proceedings 39


4.07	Purchase for Investment 39


4.08	Brokers 40


4.09	Governmental Approvals 40


4.10	Compliance with Laws 40


4.11	FPA/PUHCA 40


4.12	Due Diligence. 40


4.13	Financial Capacity 41


4.14	Trust Accounts 41


ARTICLE 5 COVENANTS OF SELLER	41


5.01	Regulatory and Other Permits. 41


5.02	Access to Information; Confidentiality 42

- ii -

TABLE OF CONTENTS

(continued)

Page


5.03	Exhibits and Schedules; Notification of Certain Matters 44


5.04	Conduct of Business. 45


5.05	Insurance 47


5.06	Risk of Loss; Casualty 48


5.07	Fulfillment of Conditions 50


5.08	Further Assurances 50


5.09	Post-Closing Access; Preservation of Records 50


5.10	Data Room 51


5.11	No Solicitation 51


5.12	Oxbow Property. 51


5.13	Audited Financials 51


5.14	Financing Cooperation 51


5.15	Equity Settlement of Certain Accounts 51


5.16	PJM Capacity Revenue 51


ARTICLE 6 COVENANTS OF PURCHASER	51


6.01	Regulatory and Other Permits 52


6.02	Fulfillment of Conditions 54


6.03	Further Assurances 54


6.04	Support Obligations 54


6.05	Purchaser Parent Guaranty 55


6.06	Post-Closing Access; Preservation of Records 55


6.07	Offers of Employment and Terminations 56


ARTICLE 7 CONDITIONS TO OBLIGATIONS OF PURCHASER	58


7.01	Bring-Down of Seller’s and the Company’s Representations and Warranties 58


7.02	Performance at Closing 59


7.03	Litigation 59


7.04	Assignment of Membership Interests 59


7.05	Approvals and Consents 59


7.06	Officers’ Certificates 59

- iii -

TABLE OF CONTENTS

(continued)

Page


7.07	FIRPTA Certificate 60


7.08	Antitrust Authorizations 60


7.09	FPA Matters 60


7.10	LPSC Matters 60


7.11	Agreements 60


7.12	No Change 60


7.13	Mortgages 60


7.14	Assigned Contracts 60


7.15	CFIUS 60


ARTICLE 8 CONDITIONS TO OBLIGATIONS OF SELLER	61


8.01	Bring-Down of Purchaser’s Representations and Warranties 61


8.02	Performance at Closing 61


8.03	Approvals and Consents 61


8.04	Litigation 61


8.05	Deliveries 61


8.06	Antitrust Authorizations 61


8.07	FPA Matters 61


8.08	CFIUS 61


8.09	Agreements 61


ARTICLE 9 TAX MATTERS	61


9.01	Certain Taxes 61


9.02	Allocation of Purchase Price 63


ARTICLE 10 SURVIVAL	64


10.01	Survival of Representations, Warranties, Covenants and Agreements 64


ARTICLE 11 INDEMNIFICATION	64


11.01	Indemnification by Seller 64


11.02	Indemnification by Purchaser 65


11.03	Period for Making Claims 66


11.04	Limitations on Claims 67


11.05	Procedure for Indemnification of Third Party Claims. 68

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TABLE OF CONTENTS

(continued)

Page


11.06	Rights of Indemnifying Party in the Defense of Third Party Claims. 68


11.07	Direct Claims 69


11.08	General 70


11.09	Indemnity Treatment 70


11.10	Mitigation 70


ARTICLE 12 TERMINATION	71


12.01	Termination 71


12.02	Effect of Termination. 71


ARTICLE 13 MISCELLANEOUS	72


13.01	Notices 72


13.02	Entire Agreement 73


13.03	Specific Performance 73


13.04	Time of the Essence 73


13.05	Expenses 73


13.06	Public Announcements 73


13.07	Waiver 74


13.08	Amendment 74


13.09	No Third Party Beneficiary 74


13.10	Assignment 74


13.11	Severability 74


13.12	Governing Law 74


13.13	Consent to Jurisdiction 75


13.14	Waiver of Jury Trial 75


13.15	Limitation on Certain Damages 75


13.16	Disclosures 76


13.17	Commercially Reasonable Efforts 76


13.18	Counterparts 76


13.19	Limitation on Liability; Waiver of Claims 76

- v -

TABLE OF CONTENTS

EXHIBITS

Exhibit A Assignment and Assumption of Membership Interests

Exhibit B Wire Transfer Instructions

Exhibit C Aggregate Net Working Capital Calculation

Exhibit D Form of Officer’s Certificate of Seller

Exhibit E Form of Officer’s Certificate of the Company

Exhibit F Form of Secretary’s Certificate of Seller

Exhibit G Form of Certificate of Non-Foreign Status of Seller

Exhibit H Form of Officer’s Certificate of Purchaser

Exhibit I Form of Secretary’s Certificate of Purchaser

Exhibit J Purchaser Parent Guaranty

Exhibit K Seller Knowledge Parties

Exhibit L Cottonwood Lease

Exhibit M Transition Services Terms

SCHEDULES

Seller Disclosure Schedules :

Schedule 3.03 Seller Consents

Schedule 3.05 Seller Approvals

Schedule 3.06 Legal Proceedings

Schedule 3.07 Brokers

Schedule 3.08 Compliance with Laws

Schedule 3.09 Ownership; Voting Trusts; Liens on Acquired Interests

Schedule 3.11 Taxes

Schedule 3.12(a) Company Contracts

Schedule 3.12(b) Contracts Defaults

Schedule 3.13 Real Property

Schedule 3.15 Environmental Matters

Schedule 3.16 Permits

- vi -

TABLE OF CONTENTS

(continued)

Schedule 3.17 Affiliate Transactions

Schedule 3.18 Intellectual Property

Schedule 3.19 Insurance

Schedule 3.19(b) Unreported Insurance Claims/Transferred Insurance Policies

Schedule 3.20 Financial Statements

Schedule 3.21(c) Absence of Certain Changes

Schedule 3.22(a) Regulatory Status

Schedule 3.23 Support Obligations

Schedule 3.24(a) List of Business Employees

Schedule 3.24(b) Collective Bargaining Agreements and Labor/Employment Issues

Schedule 3.24(e) Company Employee Plans

Schedule 3.24(h) Business Employee Payments

Schedule 3.27 Warranties

Schedule 3.29 Projects Condition

Purchaser Disclosure Schedules

Schedule 4.03 Purchaser Consents

Schedule 4.05 Purchaser Permits

Schedule 4.08 Brokers

Schedule 4.09 Governmental Approvals

Other Schedules

Schedule 1.01(a) Companies

Schedule 1.01(b) Permitted Exceptions and Permitted Liens

Schedule 1.01(c) Existing Mortgages

Schedule 1.01(d) PJM Capacity Revenue

Schedule 5.02 Contacting Co-Op Customers

Schedule 5.04(b) Actions

Schedule 5.04(b)(viii) Monthly Capital Expenditure Budgets

Schedule 5.04(b)(xvi) Employee Positions

Schedule 6.01 LPSC Approval

Schedule 6.07(a) Offers of Employment

Schedule 7.14 Assigned Contracts

Schedule 11.01(h) Indemnified Litigation

Schedule 11.01(i) Indemnified Cooperative Customer Litigation

- vii -

PURCHASE AND SALE AGREEMENT

This PURCHASE AND SALE AGREEMENT (this “ Agreement ”), dated as of February 6, 2018 (the “ Effective Date ”) is made and entered into by and among NRG Energy, Inc., a Delaware corporation (“ Seller ”), NRG South Central Generating LLC, a Delaware limited liability company (the “ Company ”), and Cleco Energy LLC, a Louisiana limited liability company (“ Purchaser ”). Seller, the Company and Purchaser are referred to, collectively, as the “ Parties ” and each, individually, as a “ Party .” Capitalized terms used herein shall have the meanings set forth in Section 1.01 .

RECITALS

WHEREAS, Seller owns one hundred percent (100%) of the outstanding membership interests of the Company;

WHEREAS, the Company owns one hundred percent (100%) of the membership interests of each of (i) NRG Sterlington Power LLC, a Delaware limited liability company (“ Sterlington ”), (ii) Big Cajun I Peaking Power LLC, a Delaware limited liability company (“ BC Peaking ”), (iii) Louisiana Generating LLC, a Delaware limited liability company (“ LA Generating ”), (iv) New Roads Holdings LLC, a Delaware limited liability company (“ New Roads ”), (v) Bayou Cove LLC, a Delaware limited liability company (“ Bayou Cove ”), which in turn owns one hundred percent (100%) of the membership interests of Bayou Cove Peaking Power LLC, a Delaware limited liability company (“ Bayou Peaking ”), and (vi) Cottonwood Development LLC, a Delaware limited liability company (“ Cottonwood ”), which in turn directly and indirectly owns one hundred percent (100%) of those membership and limited and general partnership interests in the entities set forth on Schedule 1.01(a) (those entities set forth in subsections (i) through (vi) above and on Schedule 1.01(a) , the “ Subsidiaries ”); and

WHEREAS, Sterlington owns one hundred percent (100%) of that approximately 176 MW natural-gas-fired generating station located in Sterlington, LA (the “ Sterlington Project ”); and

WHEREAS, BC Peaking owns one hundred percent (100%) of that approximately 210 MW natural-gas-fired peaking facility located in Jarreau, LA (the “ BC I Peaking Project ”); and

WHEREAS, LA Generating owns (i) one hundred percent (100%) of that approximately 210 MW natural-gas-fired peaking facility located in Jarreau, LA (the “ BC I Steam Project ”), (ii) one hundred percent (100%) of that approximately 580 MW coal-fired generating station located in New Roads, LA (the “ BC II Unit I Project ”), (iii) one hundred percent (100%) of that approximately 540 MW natural-gas-fired generating station located in New Roads, LA (the “ BC II Unit II Project ”), and (iv) fifty-eight percent (58%) of that approximately 588 MW coal-fired generating station located in New Roads, LA (the “ BC II Unit III Project ” and, together with the BC II Unit I Project and the BC II Unit II Project, the “ LA Generating Projects ”); and

WHEREAS, Bayou Peaking owns seventy five percent (75%) of that approximately 300 MW natural-gas-fired peaking facility located in Jennings, LA (the “ Bayou Project ”); and

WHEREAS, Cottonwood, indirectly through those entities set forth in Schedule 1.01(a) , owns one hundred percent (100%) of the approximately 1,263 MW natural-gas-fired generating station located in Deweyville, TX (the “ Cottonwood Project ” and, together with the Sterlington Project, the BC I Peaking Project, the LA Generating Projects and the Bayou Project, the “ Projects ” and the direct owner of each Project a “ ProjectCo ”); and

WHEREAS, Seller desires to sell, and Purchaser desires to purchase, one hundred percent (100%) of the outstanding membership interests of the Company (the “ Acquired Interests ”), on the terms and subject to the conditions set forth in this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I

DEFINITIONS, INTERPRETATION

1.01 Definitions . As used in this Agreement, the following defined terms have the meanings indicated below:

“ Accounts Payable (Affiliate) ” means all accounts payable of any Company Entity owing to Seller or any Affiliate of Seller (other than any Company Entity), including in respect of amounts paid by, or accounts payable of, Seller or any such Affiliate, to third parties on behalf of any Company Entity, including any such amounts that relate to coal, gas and other fuels, P-Card, insurance, telecom, shipping and freight, travel and entertainment, office supplies and employment payables. The Accounts Payable (Affiliate) of any Company Entity as of December 31, 2017, should be considered $0 in the event the balance is Equity Settled to $0 prior to February 28, 2018 as set forth in section 5.15.

“ Accounts Payable (Trade) ” means all accounts payable of any Company Entity other than any payables owing to Seller or any Affiliate of Seller (other than any Company Entity).

“ Accounts Receivable (Affiliate) ” means all accounts receivables from Seller or any Affiliate of Seller (other than any Company Entity) in respect of amounts received by, or accounts receivable of, Seller or any such Affiliate, on behalf of any Company Entity. The Accounts Receivable (Affiliate) of any Company Entity as of December 31, 2017, should be considered $0 in the event the balance is Equity Settled as set forth in section 5.15.

“ Accounts Receivable (Trade) ” means all trade accounts receivables, aged less than 60 days and net of the allowance for doubtful accounts, generated by or on behalf of any Company Entity in the ordinary course of business, but excluding insurance claims receivables, cash and cash equivalents, restricted cash and any receivables from Seller or any Affiliate of Seller (other than any Company Entity).

“ Accrued Notice of Violation Settlement ” means all amounts payable by any Company Entity pursuant to a 2012 settlement with the EPA, pursuant to which the Company Entities were

required to, among other things, pay certain civil fines and make expenditures on environmental mitigation projects, including the construction of a solar project on the campus of the University of Louisiana at Lafayette.

“ Acquired Interests ” has the meaning set forth in the Recitals.

“ Acquisition Proposal ” has the meaning set forth in Section 5.11 .

“ Action or Proceeding ” means any action, suit, proceeding, arbitration or investigation by or before any Governmental Authority or any tribunal (including arbitral tribunals) or other dispute resolution body.

“ Affiliate ” of a specified Person means any other Person that directly or indirectly through one or more intermediaries Controls, is Controlled by or is under common Control with the Person specified.

“ Affiliate Contract ” means any Contract between any Seller or any of their Affiliates (other than any Company Entity) on the one hand, and any Company Entity, on the other hand.

“ Aggregate Net Working Capital Amount ” means Current Assets minus Current Liabilities, in each case as of 11:59 P.M. (Eastern time) on the Balance Sheet Effective Date, in each case calculated (i) in accordance with GAAP and (ii) to the extent not inconsistent with GAAP, the Company Accounting Principles. An example of the calculation of the Net Working Capital as of December 31, 2017 is set forth on Exhibit C .

“ Aggregate Target Net Working Capital Amount ” means eighty million seven hundred thousand dollars ($80,700,000).

“ Agreement ” means this Purchase and Sale Agreement and the Exhibits, the Appendices and the Disclosure Schedules, as any of the same shall be amended or supplemented from time to time.

“ 2017 AIP Incentive Bonuses ” means those annual incentive plan bonus compensation awards recognizing performance during the 2017 fiscal year that are scheduled to be paid to certain Transferred Non-Union Employees during the Lockbox Period.

“ Allocation ” has the meaning set forth in Section 9.02(a) .

“ Anti-Terrorism Law ” means each of (a) Executive Order No. 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten To Commit, or Support Terrorism; (b) Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 (commonly known as the USA Patriot Act); (c) the Money Laundering Control Act of 1986, Public Law 99-570; (d) the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., the Trading with the Enemy Act, 50 U.S.C. App. §§ 1 et seq., any executive order or regulation promulgated thereunder and administered by the Office of Foreign Assets Control (" OFAC ") of the U.S. Department of the Treasury or the U.S. Department of State; and (e) any similar law (including any laws, rules and regulations concerning or relating to money

laundering, bribery or corruption) enacted in the United States of America subsequent to the date of this Agreement

“ Apportioned Obligations ” has the meaning set forth in Section 9.01(a) .

“ Assignment and Assumption of Membership Interests ” means the Assignment and Assumption of Membership Interests in substantially the form of Exhibit A attached hereto

“ Balance Sheet Date ” has the meaning set forth in Section 3.20 .

“ Balance Sheet Effective Date ” means December 31, 2017.

“ Base Purchase Price ” has the meaning set forth in Section 2.02.

“ Bayou Cove ” has the meaning set forth in the Recitals.

“ Bayou Peaking ” has the meaning set forth in the Recitals.

“ Bayou Project ” has the meaning set forth in the Recitals.

“ BC Peaking ” has the meaning set forth in the Recitals.

“ BC I Peaking Project ” has the meaning set forth in the Recitals.

“ BC II Unit I Project ” has the meaning set forth in the Recitals.

“ BC II Unit II Project ” has the meaning set forth in the Recitals.

“ BC II Unit III Project ” has the meaning set forth in the Recitals.

“ BC I Steam Project ” has the meaning set forth in the Recitals.

“ Business ” means the business and operations of the Company Entities as currently conducted.

“ Business Day ” means a day other than Saturday, Sunday or any day on which banks located in the State of New York are authorized or obligated to close.

“ Business Employee ” means each employee of Seller or any of its Affiliates who provides services during the majority of his or her business hours to the Business and who is set forth on Schedule 3.24(a) ; for the avoidance of doubt, the Cottonwood plant staff and employees that provide Commercial Operations support to the Business are not intended by the Parties to be Business Employees.

“ Cap ” has the meaning set forth in Section 11.04(c) .

“ CCR ” has the meaning set forth in the definition of Coal Combustion Residuals.

“ CCR Rule ” means the final rule regulating disposal of coal combustion residuals from electric utilities (74 Fed. Reg. 21302; April 17, 2015) codified at 40 CFR Part 257 and 40 CFR Part 261, and any amendments, modifications, or substitutions thereto.

“ CFIUS ” means the Committee on Foreign Investment in the United States.

“ Clean Water Act ” means 33 U.S.C. §§ 1251 et seq. , and any amendments, modifications, or substitutions thereto.

“ Closing ” has the meaning set forth in Section 2.03(a) .

“ Closing Date ” is the date on which the transactions contemplated hereunder are consummated.

“ Closing Date Schedule Supplement ” has the meaning set forth in Section 5.03(c) .

“ Coal Combustion Residuals ” or “ CCR ” means those terms as defined at 40 CFR Part 257, and any amendments modifications, or substitutions thereto.

“ COBRA ” has the meaning set forth in Section 3.24(g) .

“ Code ” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

“ Collective Bargaining Agreement ” means a collective bargaining agreement, work counsel agreement, memoranda of understanding or other Contract with a labor union or other labor organization that relates to any Business Employee.

“ Commercial Operations ” means any activities related to (i) buying and selling energy, capacity, ancillary services, fuel and transmission rights, (ii) day-ahead and real-time trading, (iii) physical dispatch of generation assets, (iv) entering into hedges, swaps and futures, (v) 24x7x365 coordination between the plants and the market operator/reliability coordinator, (vi) fundamental analysis and forecasting, and (vii) and back office functions including settlements and accounting related to the aforementioned activities.

“ Company ” has the meaning set forth in the Recitals.

“ Company Accounting Principles ” means the accounting policies, practices, judgments and methodologies of the Company Entities used in the preparation of the Financial Statements.

“ Company Contracts ” means the following Contracts listed on Schedule 3.12(a) to which any Company Entity is a party and which are in effect on the date hereof: (a) each interconnection Contract; (b) each Contract for the purchase, sale or delivery of energy, capacity or ancillary services; (c) each Contract for the transmission of electricity; (d) each swap, exchange, commodity option or hedging Contract; (e) each operation, maintenance and management Contract that is material to the operation of any Project, and any other type Contract where the consequences of a termination of such Contract would reasonably be expected to have a material effect on the operation of any Project; (f) each Contract which provides for aggregate

future payments to or from any Company Entity in excess of $1,000,000 in any calendar year, other than those that can be terminated without material penalty by such Company Entity upon ninety (90) days’ notice or less; (g) each Contract under which any Company Entity is obligated to sell or lease real or personal property (other than sales of electric energy in the ordinary course of business) having a value in excess of $500,000; (h) each Contract under which any Company Entity has (A) created, incurred, assumed or guaranteed any material outstanding Indebtedness, or (B) extended credit to any Person in an amount in excess of $1,000,000 of committed credit; (i) each Affiliate Contract; (j) each Contract establishing any joint venture, strategic alliance or other similar collaboration; (k) each Contract providing for leveraged lease arrangements or tax indemnification arrangements; (l) each Contract providing for product warranty or repair obligations by a manufacturer or vendor of equipment owned or leased by any Company Entity with a fair market value of more than $1,000,000; (m) each Contract with a Governmental Authority; (n) each Contract providing for any limit or restriction on the ability of any Company Entity to compete in any line of business or in any geographic area; (o) each Contract relating to a sale or lease of real or personal property having a value in excess of $1,000,000 under which any Company Entity has indemnification obligations that have not completely lapsed; (p) each Contract that is a settlement agreement of any material Action or Proceeding within the five (5) years preceding the Effective Date; (q) each Contract that is an employment or consulting agreement that involves an aggregate future or potential liability in excess of $100,000; and (r) each other Contract that is material to any Company Entity or any Project and not otherwise within this definition.

“ Company Employee Plan ” means each Pension Plan, Multiemployer Plan and each other pension, cash balance, savings, profit-sharing, supplemental pension, supplemental savings, deferred compensation, cash or equity incentive, bonus, medical, dental, vision, long-term care, hospitalization, prescription drug or other health, flexible benefits, health care reimbursement account, dependent care account or other cafeteria, short- or long-term disability, vacation, sick leave or other paid time-off, severance, retention, tuition reimbursement, transportation or other fringe or any other employee plan, program or arrangement, whether written or verbal, and whether or not subject to ERISA, that is maintained or contributed to by Seller or any of its ERISA Affiliates, or to which Seller or any of its ERISA Affiliates is required to contribute, in any case, for the benefit of any Business Employee.

“ Company Entities ” means the Company and the Subsidiaries.

“ Condemnation Value ” has the meaning set forth in Section 5.06(a) .

“ Confidentiality Agreement ” means that certain Confidentiality Agreement, dated as of August 31, 2017, between Seller and Purchaser Parent.

“ Consents ” means consents, approvals, exemptions, waivers, authorizations, filings, registrations and notifications.

“ Consequential Damages ” has the meaning set forth in Section 13.15 .

“ Constitutive Documents ” means the certificates of formation and the limited liability company agreements and limited partnership agreements, as amended (if applicable) of the Company and the Subsidiaries.

“ Continuing Employees ” has the meaning set forth in Section 6.07(a) .

“ Contract ” means any written or oral agreement, purchase order, commitment, evidence of Indebtedness, mortgage, indenture, security agreement, guaranty, option, easement, lease, license, or other contract, entered into by a Person or by which a Person or any of its assets are bound, including any amendments or modifications thereto.

“ Control ” of a Person means the power, directly or indirectly, to direct or cause the direction of the management or policies of such Person (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).

“ Controlled Group Pension Plan ” means any Pension Plan or Multiemployer Plan in which Seller or any ERISA Affiliate sponsors, maintains, participates in or is obligated to contribute to or in which any Seller or ERISA Affiliate has or has had any liability in the six year period immediately preceding the date hereof.

“ Cooperative Customers ” means Beauregard Electric Cooperative, Inc., Claiborne Electric Cooperative, Inc., Concordia Electric Cooperative, Inc., Jefferson Davis Electric Cooperative, Inc., Pointe Coupee Electric Membership Corporation, South Louisiana Electric Cooperative Association, Southwest Louisiana Electric Membership Corporation, Washington-St. Tammany Electric Corp., Inc. and Northeast Louisiana Power Cooperative, Inc.

“ Cottonwood ” has the meaning set forth in the Recitals.

“ Cottonwood Energy ” means Cottonwood Energy Company LP.

“ Cottonwood Lease ” has the meaning set forth in Section 7.11(ii) .

“ Cottonwood Monthly Overhead Cost ” means eighty-four thousand five hundred dollars ($84,500).

“ Cottonwood Project ” has the meaning set forth in the Recitals.

“ Current Assets ” means Accounts Receivable (Trade), Accounts Receivable (Affiliate), Working Capital Inventory and Prepaid Expenses, but excluding (i) any amounts subject to indemnification pursuant to Section 11.01(c) , (d) , (f) , (g) , (h) , (i) , (j) and (k) , and (ii) the Entergy Litigation Client Trust Account.

“ Current Liabilities ” means Accounts Payable (Trade), Accounts Payable (Affiliate), Accrued Notice of Violation Settlement, unpaid Taxes and other current liabilities of any Company Entity, but excluding any amounts subject to indemnification pursuant to Section 11.01(c), (d), (f), (g), (h), (i), (j) and (k).

“ Debt Financing ” means debt financing obtained or to be obtained by Purchaser for the purpose of funding all or a portion of the Base Purchase Price.

“ Deductible ” has the meaning set forth in Section 11.04(a) .

“ Disclosure Schedules ” means the schedules attached to this Agreement, and dated as of the date hereof.

“ Effective Date ” has the meaning set forth in the Preamble.

“ Effluent Limitations Guidelines ” means the final rule regulating levels of toxic materials in wastewater that can be discharged from power plants codified at 40 CFR Part 423, and any amendments, modifications, or substitutions thereto.

“ Entergy Litigation Client Trust Account ” means that client trust account held by Kean Miller LLP in the name of Seller containing ten million dollars ($10,000,000).

“ Environmental Laws ” means any Law relating to pollution or the protection of human health, the environment or natural resources, or the generation, use, handling, processing, treatment, storage, transportation, Release or threatened Release of Hazardous Substances into the environment, including ambient air, surface water, ground water, subsurface or land, or otherwise relating to the presence, manufacture, processing, distribution, use, treatment storage, Release, transport or handling of any Hazardous Substances, including, but not limited to, the Clean Air Act (42 U.S.C. § 7401 et seq. ), the Federal Water Pollution Control Act (including, but not limited to the Clean Water Act (33 U.S.C. §§ 1251 et seq. ) and the Oil Pollution Act (33 U.S.C. §§ 2701 et seq. )), the Safe Drinking Water Act (42 U.S.C. §§ 300f et seq. ), the Federal Solid Waste Disposal Act (including, but not limited to, the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §§ 6901 et seq. )), the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. §§ 9601 et seq. ), the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq. ), the Hazardous Materials Transportation Act (49 U.S.C. §§ 5101 et seq. ), the Surface Mining Control and Reclamation Act (30 U.S.C. §§ 1201 et seq. ), the Endangered Species Act (16 U.S.C. §§ 1531 et seq. ), the Federal Insecticide, Fungicide and Rodenticide Act (15 U.S.C. §§ 2601 et seq. ), the Emergency Planning and Community Right-to-Know Act (42 U.S.C. §§ 11001 et seq. ), and the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq. ) (to the extent relating to human exposure to Hazardous Materials) and any other federal, state or local laws, ordinances, rules, codes, common law or regulations now or hereafter existing relating to any of the foregoing.

“ Environmental Liabilities ” means any and all Liabilities, claims, costs, fines, penalties or damages incurred or imposed (a) pursuant to any Order, notice of responsibility, directive, injunction, judgment or similar act (including settlements) by any Governmental Authority to the extent arising out of a violation or alleged violation of Environmental Law or Permit issued pursuant to Environmental Law or (b) pursuant to any complaint, claim or cause of action by a Governmental Authority or other third Person for personal injury, property damage, damage to natural resources, protection of human health and the environment, or investigation, remediation, cost recovery or response costs, to the extent arising out of or attributable to any violation of, or

any remedial obligation under, any Environmental Law, Order, or Permit issued pursuant to Environmental Law.

“ EPA ” means the United States Environmental Protection Agency, or its successor.

“ Equity Interests ” means, with respect to an entity, capital stock, partnership or membership interests or units (whether general or limited), and any other similar interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distribution of assets of, such entity.

“ Equity Settle ” means, in respect of Accounts Payable (Affiliate) and Accounts Receivable (Affiliate), one or more transactions which in aggregate effect cancel all such payables and receivables as may be outstanding on the Balance Sheet Effective Date, which transaction may include the settlement of a payable by converting the payable into additional equity or the settlement of a receivable through a reduction to equity, in each case without a transfer of cash or creation or modification of any other obligations as between the parties to such transaction or transactions.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

“ ERISA Affiliate ” means, with respect to any Person or any other entity, trade or business that is a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes such first entity, or that is a member of the same “controlled group” as such first entity pursuant to Section 4001(a)(14) of ERISA.

“ Estimated Aggregate Net Working Capital Amount ” has the meaning set forth in Section 2.04(a) .

“ Event of Loss ” has the meaning set forth in Section 5.06 .

“ EWG Company ” or “ EWG Companies ” has the meaning set forth in Section 3.22(a) .

“ Exempt Wholesale Generator ” means an “exempt wholesale generator” under PUHCA and applicable FERC regulations, as amended from time to time.

“ Existing Mortgages ” means those mortgages set forth on Schedule 1.01(c) .

“ FERC ” means the Federal Energy Regulatory Commission, or its successor.

“ Final Aggregate Net Working Capital Amount ” has the meaning set forth in Section 2.04(b) .

“ Final Purchase Price ” has the meaning set forth in Section 2.02 .

“ Financial Statements ” has the meaning set forth in Section 3.20 .

“ Financing Sources ” means each Person (including each lender, agent and arranger) that has committed or will commit to provide or arrange, or otherwise entered into agreement in connection with, the Debt Financing or other financings in connection with the transactions contemplated hereby, including any commitment letters, engagement letters, credit agreements, loan agreements, joinder agreements or indentures relating thereto, together with their respective Affiliates and their respective Affiliates’ Representatives and their respective successors and assigns.

“ Foreign Corrupt Practices Act ” has the meaning set forth in Section 3.31 .

“ FPA ” means the Federal Power Act, as amended, and FERC’s implementing regulations promulgated thereunder.

“ Fundamental Representations ” has the meaning set forth in Section 11.03(i) .

“ GAAP ” has the meaning set forth in Section 1.02(c) .

“ Governmental Approval ” means any consent or approval required by any Governmental Authority.

“ Governmental Authority ” means any federal, state, local or municipal governmental body; any governmental, quasi-governmental, regulatory or administrative agency, commission, body or other authority exercising or entitled to exercise any administrative, executive, judicial, legislative, policy, regulatory or taxing authority or power, including EPA, Louisiana Department of Environmental Quality, the Texas Commission on Environmental Quality, NERC, LPSC, FERC and each Regional Entity; or any court or governmental tribunal.

“ Hazardous Substances ” means any chemical, substance, element, compound or mixture, whether solid, liquid or gaseous: (a) which is defined as “hazardous waste” “hazardous substance,” “hazardous material,” “extremely hazardous waste,” “restricted hazardous waste,” “toxic substance,” “toxic pollutant” or “pollutant” or “contaminant” under any Environmental Law; (b) which is otherwise hazardous, toxic, or injurious and is subject to regulation by any Governmental Authority; (c) petroleum hydrocarbons, petroleum constituents, petroleum products or by products (other than naturally occurring petroleum hydrocarbons); (d) polychlorinated biphenyls (PCBs); (e) asbestos-containing materials (other than naturally occurring asbestos); (f) radioactive materials (other than naturally occurring radioactive materials); (g) urea formaldehyde foam insulation; (h) radon gas; (i) lead-based paint; or (j) flammable, ignitable, corrosive, or explosive substances or materials.

“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“ Indebtedness ” means all obligations of a Person (a) for borrowed money, (b) evidenced by notes, bonds, debentures or similar instruments, (c) for the deferred purchase price of goods or services (other than trade payables or accruals incurred in the ordinary course of business and not past due), (d) under conditional sale or other title retention agreements, (e) under capital leases, (f) secured by a Lien on the assets of such Person, whether or not such obligation has been assumed by such Person, (g) with respect to reimbursement obligations for letters of credit

and other similar instruments (whether or not drawn), (h) pursuant to interest rate, currency swap, commodity or other hedging transactions, (i) to purchase, redeem, retire or defease any Equity Interests or securities convertible into Equity Interests, (j) for any change-of-control payments, unpaid employee severance, pay or bonuses, (k) for any fees and expenses (including fees and expenses of investment bankers, counsel, accountants or other advisors) incurred in connection with the transactions contemplated by this Agreement; or (l) in the nature of guaranties of the obligations described in clauses (a) through (k) above of any other Person or as to which such Person has an obligation substantially the economic equivalent of a guaranty, or (m) in respect of any other amount properly characterized as indebtedness in accordance with GAAP.

“ Indemnified Party ” means any Person claiming indemnification under any provision of Article 11 .

“ Indemnifying Party ” means any Person against whom a claim for indemnification is being asserted under any provision of Article 11 .

“ Indemnity Reduction Amounts ” has the meaning set forth in Section 11.10 .

“ Injunction ” has the meaning set forth in Section 13.17 .

“ Intercompany Transfers ” means any settlement of accounts payable and accounts receivable, (a) by any Company Entity, on the one hand, to any Seller or any of its Affiliates (other than any Company Entity), on the other hand, or (b) by any Seller or any of its Affiliates (other than any Company Entity), on the one hand, to any Company Entity, on the other hand.

“ Interim Period ” means the period from the Effective Date through the Closing Date.

“ Interim Reports ” has the meaning set forth in Section 5.04(e) .

“ Inventory ” means any and all of the coal and other fuel supplies (including diesel fuel), spare, replacement or other parts, supplies, and other items of inventory intended to be used or consumed at any Project in the ordinary course of the Business, including chemicals, lubricants, fluids, oils, filters, connectors, seals, gaskets, maintenance shop supplies, and office supplies.

“ IRS ” means the United States Internal Revenue Service.

“ IT Systems ” has the meaning set forth in Section 3.18(d) .

“ Knowledge of Purchaser ” or “ Purchaser’s Knowledge ” means the actual knowledge of William Fontenot, Jeff Baudier and Robbie LaBorde.

“ Knowledge of Seller ” or “ Seller’s Knowledge ” means the actual knowledge of those Persons set forth in Exhibit K after reasonable inquiry of their direct reports or such other Persons who would reasonably be expected to know such information.

“ LA Generating ” has the meaning set forth in the Recitals.

“ LA Generating Projects ” has the meaning set forth in the Recitals.

“ Laws ” means all laws (including without limitation Environmental Laws), statutes, treaties, rules, Orders, codes, ordinances, standards, regulations, restrictions, official guidelines, policies, directives, interpretations, Permits or other pronouncements having the effect of law of any Governmental Authority.

“ Leakage ” means, during the Lockbox Period, (a) any distributions or other transfers by any Company Entity of any cash, assets or value to, on behalf of or for the benefit of Seller or any of its Affiliates (other than a Company Entity), including (i) any dividends or other distributions, (ii) any payments or other transfers in respect of related party transactions with Seller or any of its Affiliates (other than a Company Entity) other than to the extent such payments or other transfers are in respect of trade payables to third parties that are not Affiliates of Seller (including, for the avoidance of doubt, any payments to Seller or any of its Affiliates (other than a Company Entity) to the extent (x) the amounts of such payments are in respect of costs payable to third parties that are not Affiliates of Seller and (y) such amounts are paid by Seller or any of its Affiliates (other than a Company Entity) to such third parties on behalf of a Company Entity), (iii) any provision of power, capacity or other goods or services by any Company Entity for which either (A) the Company Entity receives amounts that are less than the fair market value of such power, capacity or other goods or services (provided that, in the case of power, capacity or other goods and services provided to third parties other than Seller or any of its Affiliates, fair market value shall be measured by reference to the amounts received by Seller and its Affiliates in respect thereof) or (B) Seller or any of its Affiliates (other than a Company Entity) receives amounts in excess of those received by the Company Entities, (iv) any repayment of shareholder, member or other Affiliate loans, and (v) any waiver or release of any Indebtedness or other Liability owed to any Company Entity, (b) any payments by any Company Entity to any Person in respect of Indebtedness owed by any Company Entity, and (c) any payments by any Company Entity to any Person of any amount that is subject to indemnification (or would be subject to indemnification if not paid during the Lockbox Period) by Seller pursuant to Section 11.01 .

“ Leakage/Indebtedness Certificate ” has the meaning set forth in Section 7.06 .

“ Liabilities ” means any liability, Indebtedness, obligation, commitment, or expense, in each case, requiring either (i) the payment of a monetary amount, or (ii) any type or fulfillment of an obligation, and in each case whether accrued, absolute, contingent, asserted, matured, unmatured, secured or unsecured.

“ Lien ” means any (statutory or otherwise) lien, mortgage, pledge, security interest, mandatory deposit, purchase right, option, right of refusal, easement, right-of-way, covenant, condition, restriction, reservation, lease, charge or encumbrance of any kind (including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any lien or security interest), and including the filing of any financing statement under the UCC or comparable Law.

“ Lockbox Period ” means the period from January 1, 2018 through the Closing Date.

“ Lockbox Start Date ” means January 1, 2018.

“ Losses ” means any and all claims, obligations, damages, losses, Liabilities (including, without limitation, Environmental Liabilities), costs, and expenses (including interest payable as part thereof, settlement costs, non-cash consideration, and any reasonable legal, consultant, accounting or other expenses for investigating, pursuing or defending any actions or threatened actions).

“ LPSC ” means the Louisiana Public Service Commission.

“ LTSA Rights Agreement ” means an agreement between Seller and Purchaser containing the terms and conditions set forth in Exhibit M to the Cottonwood Lease and in form and substance reasonably satisfactory to each of Seller and Purchaser.

“ Major Loss ” has the meaning set forth in Section 5.06(b) .

“ Material Adverse Effect ” with respect to Seller or any Company Entity, means any occurrence after the Effective Date set forth in clause (A) or clause (B) of this definition, and with respect to the Purchaser, means any occurrence set forth in clause (A) of this definition: (A) any fact, event, circumstance, condition, change or effect materially impairing the ability of such Person to consummate the transactions contemplated by this Agreement or to perform its obligations hereunder; or (B) any fact, event, circumstance, condition, change or effect that has, or would reasonably be expected to have, individually or in the aggregate, a materially adverse effect on the assets, properties, liabilities, financial condition or results of operations of the Company or any Subsidiary or of the Business taken as a whole; provided , however , that none of the following shall be or will be at the Closing deemed to constitute and shall not be taken into account in determining the occurrence of a Material Adverse Effect: any fact, event, circumstance, condition, change or effect resulting from (a) any economic change generally affecting the international, national or regional (i) electric generating industry or (ii) wholesale markets for electric power, except in either case to the extent such changes have a materially disproportionate effect on the Projects relative to other generation facilities in Louisiana and Texas; (b) any economic change in markets for commodities or supplies, including electric power, as applicable, used in connection with the Company or any Subsidiary; (c) any change in general regulatory or political conditions, including any engagements of hostilities, acts of war or terrorist activities, natural disasters or weather-related events (other than events that cause physical damage to any Project or transmission service directly from any Project) or changes imposed by a Governmental Authority associated with additional security; (d) any change in any Laws (including Environmental Laws), industry standards generally affecting the industry or markets in which the Company or any Subsidiary operate or GAAP, in each case that is initially proposed after the Effective Date, except in each case to the extent such changes have a materially disproportionate effect on the Projects relative to other generation facilities in Louisiana and Texas; or (e) any change in the financial, banking, or securities markets (including any suspension of trading in, or limitation on prices for, securities on the New York Stock Exchange or Nasdaq Stock Market) or any change in the general national or regional economic or financial conditions; provided , however , that any fact, event, circumstance, condition, change or effect resulting from clauses (a) through (e) shall nonetheless be taken into consideration in determining whether a Material Adverse Effect has occurred to the extent such facts, events,

circumstances, conditions, changes or effects have a materially disproportionate impact on the Company or the Subsidiaries, taken as whole, as compared to similarly situated businesses in the same industry and in the same geographical area.

“ Multiemployer Plan ” means any “multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA that is or was sponsored, maintained or contributed to by Seller, the Company, any Subsidiary or any ERISA Affiliate of Seller.

“ NERC ” means the North American Electric Reliability Corporation.

“ Neutral Auditor ” means Ernst & Young or, if Ernst & Young is unable to serve, an impartial nationally recognized firm of independent certified public accountants other than Seller’s accountants or Purchaser’s accountants, mutually agreed to by Purchaser and Seller.

“ New Roads ” has the meaning set forth in the Recitals.

“ Option ” with respect to any Person means any security, right, subscription, warrant, option, “phantom” stock right or other Contract that gives the right to (i) purchase or otherwise receive or be issued any shares of capital stock or other security or equity interest of such Person or any security or right of any kind convertible into or exchangeable or exercisable for any shares of capital stock or other security or equity interest of such Person, or (ii) receive or exercise any benefits or rights similar to any rights enjoyed by or accruing to the holder of shares of capital stock (or any other equity interest or security) of such Person, including any rights to participate in the equity or income of such Person or to participate in or direct the election of any directors or officers (or similar positions) of such Person or the manner in which any shares of capital stock (or any other security or equity interest) of such Person are voted.

“ Order ” means any writ, judgment, injunction, ruling, decision, order or similar direction of any Governmental Authority, whether preliminary or final.

“ Other Real Property ” has the meaning set forth in Section 3.13(a) .

“ Owned Real Property ” has the meaning set forth in Section 3.13(a) .

“ Oxbow Property ” means that Real Property described on Schedule 3.13 as the “Oxbow Property” which Seller shall, pursuant to Section 5.12 , cause to be transferred by the Company Entities to Seller or an Affiliate of Seller (other than a Company Entity) prior to Closing.

“ Oxbow Property Transfer ” has the meaning set forth in Section 5.12 .

“ Party ” or “ Parties ” has the meaning set forth in the preamble of this Agreement.

“ Pension Plan ” means any “employee benefit plan” within the meaning of Section 3(3) of ERISA, that is (or when in effect was) subject to Title IV of ERISA or Section 412 of the Code and is or was sponsored, maintained or contributed to by (i) Seller, the Company, any Subsidiary or any ERISA Affiliate of Seller.

“ Permit ” means all licenses, permits, consents, authorizations, approvals, ratifications, certifications, registrations, exemptions, variances, exceptions and similar consents granted or issued by any Governmental Authority.

“ Permitted Exceptions ” means, with respect to the Real Property, the following:

(a) all Liens for Taxes, which are not due and payable as of the Closing Date or, if due, are (i) not delinquent or (ii) being contested in good faith through appropriate proceedings and set forth on Schedule 1.01(b) and as to which adequate reserves in accordance with GAAP have been taken on the books of the Company or any Subsidiary;

(b) all building codes and zoning ordinances and other similar Laws of any Governmental Authority heretofore, now or hereafter enacted, made or issued by any such Governmental Authority affecting the Real Property;

(c) all easements (including drainage), rights-of-way, cemeteries and burial grounds, covenants, conditions, restrictions, reservations, licenses, agreements, and other similar matters which would not reasonably be expected to, individually or in the aggregate, materially detract from the value or continued use and operation of the subject property as presently operated consistent with past practice;

(d) all encroachments, overlaps, boundary line disputes, shortages in area, and other similar matters which would not reasonably be expected to, individually or in the aggregate, materially detract from the value or continued use and operation of the subject property as presently operated consistent with past practice;

(e) all electric, telephone, gas, sanitary sewer, storm sewer, water and other utility lines, pipelines, service lines and facilities of any nature now located on, over or under the Real Property, and all licenses, easements, rights-of-way and other similar agreements relating thereto which would not reasonably be expected to, individually or in the aggregate, materially detract from the value or continued use and operation of the subject property as presently operated consistent with past practice;

(f) all existing public and private roads and streets (whether dedicated or undedicated), and all railroad lines and rights-of-way affecting the Real Property which would not reasonably be expected to, individually or in the aggregate, materially detract from the value or continued use and operation of the subject property as presently operated consistent with past practice;

(g) all rights, but excluding any rights to use the surface of the Real Property, with respect to the ownership, mining, extraction and removal of minerals of whatever kind and character (including, without limitation, all coal, iron ore, oil, gas, sulfur, methane gas in coal seams, limestone and other minerals, metals and ores) that have been granted, leased, excepted or reserved, except in favor of Seller or any Company Entity, prior to the date hereof which would not, individually or in the aggregate, materially detract from the value or continued use and operation of the subject property as presently operated consistent with past practice; and

(h) inchoate mechanic’s and materialmen’s liens for construction in progress and workmen’s, repairmen’s, warehousemen’s and carrier’s liens arising by operation of law in the ordinary course of business consistent with past practice of the Company or any Subsidiary (i) as to which there is no existing default on the part of the Company or any Subsidiary or (ii) that are being contested in good faith through appropriate proceedings and as set forth on Schedule 1.01(b) and as to which adequate reserves in accordance with GAAP have been taken on the books of the Company or any Subsidiary.

“ Permitted Intercompany Transfers ” means (1) any Intercompany Transfer consistent with historical practice that does not constitute Leakage and involves (a) any payment, repayment or prepayment solely related to the sale of energy, capacity or ancillary services (in each case net of any energy, capacity or ancillary service costs incurred by any Company Entity solely for the purpose of meeting its load support obligations pursuant to any Company Contract with an electric cooperative), (b) any net payment solely related to a Company Contract with a municipal utility, (c) any payment, prepayment or repayment solely related to the costs of fuel consumed by any Project for the production of electricity, (d) any payment, prepayment or repayment solely related to wages and related employee/employer expenses, including travel and entertainment expenses, (e) any payment, prepayment or repayment solely related to P-Card transactions of the Company Entities, (f) any payment, prepayment or repayment solely related to insurance and (g) any payment, prepayment or repayment solely to the extent related to the transmission required for the PJM 2017/2018 Capacity Revenue (2) any dividend or other distribution of cash in an amount not to exceed the revenues generated through the operation of the Cottonwood Project minus the plant-level costs (including, for avoidance of doubt, all costs that would be borne by the “Tenant” pursuant to the Cottonwood Lease as if it were in effect during the Lockbox Period) and, for each month during the Lockbox Period, the Cottonwood Monthly Overhead Cost incurred for the operation thereof by Cottonwood and those entities set forth in Schedule 1.01(a) during the Lockbox Period; provided that , for the avoidance of doubt, such revenues shall not include any amounts in respect of lease payments pursuant to the Cottonwood Lease.

“ Permitted Liens ” means any (a) Permitted Exceptions; (b) good faith deposits in the ordinary course of business in connection with bids, tenders, leases, contracts or other agreements, including rent security deposits; (c) pledges or deposits in the ordinary course of business to secure public or statutory obligations or appeal bonds; (d) in the case of personal property owned or held by the Company or any Subsidiary, covenants and other restrictions in the Company Contracts; and (e) any other Liens set forth on Schedule 1.01(b) .

“ Person ” means any natural person, corporation, limited liability company, general partnership, limited partnership, proprietorship, other business, entity, organization, trust, union, association or Governmental Authority.

“ PJM 2017/2018 Capacity Revenue ” means any PJM capacity revenue for the 2017/2018 delivery year that is related to the BC II Unit I Project and the BC II Unit II Project.

“ PJM 2018/2019 Capacity Revenue ” means any PJM net capacity revenue for the 2018/2019 delivery year that is related to the BC II Unit I Project and the BC II Unit II Project, including the revenue and offset costs set forth on Schedule 1.01(d) .

“ Post-Closing Aggregate Net Working Capital Adjustment Amount ” has the meaning set forth in Section 2.04(f) .

“ Prepaid Expenses ” means contractual amounts prepaid by any Company Entity to Cooperative Customers for trade group participation.

“ Project ” has the meaning set forth in the Recitals.

“ ProjectCo ” has the meaning set forth in the Recitals.

“ Project Site Agreements ” has the meaning set forth in Section 3.13(b) .

“ Proposed Aggregate Net Working Capital Amount ” has the meaning set forth in Section 2.04(b) .

“ PUHCA ” means the Public Utility Holding Company Act of 2005.

“ Purchaser ” has the meaning set forth in the preamble of this Agreement.

“ Purchaser Approvals ” has the meaning set forth in Section 4.09 .

“ Purchaser Consents ” has the meaning set forth in Section 4.03 .

“ Purchaser Indemnified Parties ” means Purchaser, its successors and assigns, Purchaser Parent, and each of their Representatives.

“ Purchaser Parent ” means Cleco Corporate Holdings LLC, a Louisiana limited liability company.

“ Purchaser Parent Guaranty ” means that guaranty of Purchaser Parent dated as of the Effective Date and attached hereto as Exhibit J .

“ Put Option Agreement ” means an agreement between Seller and Purchaser containing the terms and conditions set forth in Exhibit N to the Cottonwood Lease and in form and substance reasonably satisfactory to each of Seller and Purchaser.

“ Real Property ” means collectively the Owned Real Property and the Other Real Property, as such terms are defined in Section 3.13(a) .

“ Regional Entity ” means SERC Reliability Corporation or its successor.

“ Release ” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing of any Hazardous Substances.

“ Representatives ” means, as to any Person, its officers, directors, managers, employees, partners, members, stockholders, counsel, representatives, agents, accountants, advisers, engineers, and consultants.

“ Restoration Costs ” has the meaning set forth in Section 5.06(a) .

“ Restricted Party ” means any Person listed (a) in the Exhibit to Executive Order No. 13224 of September 23, 2001 - Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten To Commit, or Support Terrorism; (b) on the “Specially Designated Nationals and Blocked Persons” list maintained by the OFAC; (c) in any sanctions-related list of designated Persons maintained by OFAC or the U.S. Department of State or any country, region or territory which is itself the subject or target of any economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time pursuant to Anti-Terrorism Laws, (d) in any successor list to either of the foregoing; or (e) any Person operating, organized or resident in or owned or controlled by any such Person or Persons described in the foregoing clauses (at the time of this Agreement, the parties hereto acknowledge that Restricted Parties include Crimea, Cuba, Iran, North Korea, Sudan and Syria).

“ Seller ” has the meaning set forth in the preamble of this Agreement, and includes its respective successors and assigns.

“ Seller Approvals ” has the meaning set forth in Section 3.05.

“ Seller Consents ” has the meaning set forth in Section 3.03 .

“ Seller Employment Liabilities ” has the meaning set forth in Section 6.07(d) .

“ Seller Indemnified Parties ” means Seller, its successors and assigns, and its Representatives.

“ Specific Environmental Indemnification Items ” means any Losses incurred with respect to a LA Generating Project impoundment in connection with any prohibition on the placement of CCR or non-CCR waste-streams in an impoundment or closure of an impoundment required by the Clean Water Act, the CCR Rule, the Effluent Limitations Guidelines or similar state Environmental Laws and any challenge to the extent seeking such a prohibition or closure (including challenges to the compliance demonstration for the location restriction standards or to the liner certifications or safety/stability certifications pursuant to the CCR Rule); provided, however, that (x) no Purchaser internal costs incurred in respect of routine CCR rule compliance shall be included within the scope of Specific Environmental Indemnification Items, and (y) Purchaser shall work to minimize any such Losses, shall keep Seller apprised of any ongoing litigation or other adversarial proceedings and shall reasonably take into consideration Seller’s input in respect thereof.

“ Special Item Cap ” has the meaning set forth in Section 11.04(d) .

“ Special Item Deductible ” has the meaning set forth in Section 11.04(d) .

“ Sterlington ” has the meaning set forth in the Recitals.

“ Sterlington Project ” has the meaning set forth in the Recitals.

“ Subsidiaries ” has the meaning set forth in the Recitals.

“ Support Obligations ” has the meaning set forth in Section 6.04 .

“ Taking ” has the meaning set forth in Section 5.06 .

“ Tax ” or “ Taxes ” means any income, profits, gross or net receipts, property, sales, use, capital gain, transfer, excise, license, production, franchise, employment, social security, occupation, payroll, workmen’s compensation, custom duties, registration, capital, governmental pension or insurance, withholding, royalty, severance, stamp or documentary, value added, goods and services, business or occupation or other tax, charge, assessment, duty, levy, unclaimed property or escheat obligation, compulsory loan or fee of any kind (including any interest, additions to tax, or civil or criminal penalties thereon) of the United States or any state or local jurisdiction therein required to be collected, or of any other nation or any jurisdiction therein, together with any obligations for the Taxes of any other person whether as successor, a member of a group, indemnitor, or otherwise, but excluding amounts paid or payable in respect of Permits.

“ Tax Returns ” means any report, form, return, statement or other information (including any amendments) required to be supplied to or filed with a Governmental Authority by a Person with respect to Taxes, including, but not limited to, information returns, any amendments thereof or schedule or attachment thereto and any documents with respect to or accompanying requests for the extension of time in which to file any such report, form, return, statement or other information.

“ Termination Date ” has the meaning set forth in Section 12.01(b) .

“ Title Policy ” has the meaning set forth in Section 3.14.

“ Transfer Taxes ” has the meaning set forth in Section 9.01(d) .

“ Transferred Non-Union Employee ” has the meaning set forth in Section 6.07(c) .

“ Transferred Union Employee ” has the meaning set forth in Section 6.07(b) .

“ WARN Act ” has the meaning set forth in Section 3.23(b) .

“ WARN Notices ” has the meaning set forth in Section 6.07(h) .

“ Working Capital Inventory ” means all spare parts and coal inventory of any Company Entity, net of any allowances or reserves.

“ Year End Financial Statements ” has the meaning set forth in Section 3.20 .

1.02 Interpretation.

(a) Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender, (ii) words using the singular or plural number also include the plural or singular number, respectively, (iii) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement, (iv) the terms “Article” or “Section” refer to the specified Article or Section of this Agreement, (v) the words “include” and “including” are not words of limitation and shall be deemed to be followed by the words

“without limitation,” (vi) the use of the word “or” to connect two or more phrases shall be construed as inclusive of all such phrases (e.g., “A or B” means “A or B, or both”), (vii) the use of the conjunction “and/or” shall be construed as “any or all of” and (viii) references to Persons include their respective successors and permitted assigns and, in the case of Governmental Authorities, Persons succeeding to their respective functions and capacities.

(b) Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified.

(c) All accounting terms used herein and not expressly defined herein shall have the meanings given to them under United States generally accepted accounting principles (“ GAAP ”).

(d) Unless the context otherwise requires, a reference to any Law includes any amendment, modification or successor thereto.

(e) Any representation or warranty contained herein as to the enforceability of a Contract shall be subject to the effect of any bankruptcy, insolvency, reorganization, moratorium or other similar Law affecting the enforcement of creditors’ rights generally and to general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law).

(f) In the event of a conflict between this Agreement and any exhibit, schedule or appendix hereto, this Agreement shall control.

(g) The Article and Section headings have been used solely for convenience, and are not intended to describe, interpret, define or limit the scope of this Agreement.

(h) Conflicts or discrepancies, errors, or omissions in this Agreement or the various documents delivered in connection with this Agreement will not be strictly construed against the drafter of the contract language, rather, they shall be resolved by applying the most reasonable interpretation under the circumstances, giving full consideration to the intentions of the Parties at the time of contracting.

(i) A reference to any agreement or document is to that agreement or document as amended, novated, supplemented or replaced from time to time.

ARTICLE 2

SALE OF MEMBERSHIP INTERESTS AND

CLOSING

2.01 Purchase and Sale . Seller agrees to sell to Purchaser, and Purchaser agrees to purchase from Seller, all of the right, title and interest of Seller in and to the Acquired Interests at the Closing on the terms and subject to the conditions set forth in this Agreement.

2.02 Payment of Purchase Price . Upon the terms and subject to the conditions hereinafter set forth, in consideration of the delivery by Seller of the Acquired Interests, Purchaser shall by wire transfer of immediately available United States funds to an account or

accounts that have been designated by Seller to Purchaser in writing prior to the Closing, pay to Seller at the Closing (a) one billion dollars ($1,000,000,000) (the “ Base Purchase Price ”), plus (b) the Estimated Aggregate Net Working Capital Amount, minus (c) the Aggregate Target Net Working Capital Amount, minus (d) the aggregate amount of Leakage set forth in the Leakage/Indebtedness Certificate, minus (e) the aggregate amount of Indebtedness of the Company Entities as of the Closing Date set forth in the Leakage/Indebtedness Certificate. The Base Purchase Price shall be adjusted in accordance with Section 5.06 (such adjusted amount, the “ Final Purchase Price ”).

2.03 Closing.

(a) The closing of the transactions described in Section 2.01 (the “ Closing ”) will take place at the offices of Jones Day, counsel to Seller, at 250 Vesey Street, New York, NY 10281-1047, or at such other place as the Parties mutually agree, at 10 A.M. local time, on the first (1 ^st ) day of the calendar month ten (10) Business Days following the date on which the conditions set forth in Article 7 and Article 8 have been either satisfied or waived by the party for whose benefit such condition exists (or at such other time as the Parties mutually agree).

(b) At the Closing, the following shall occur:

(i) Purchaser shall pay an amount equal to (a) the Base Purchase Price, plus (b) the Estimated Aggregate Net Working Capital Amount, minus (c) the Aggregate Target Net Working Capital Amount, minus (d) the aggregate amount of Leakage set forth in the Leakage/Indebtedness Certificate, minus (e) the aggregate amount of Indebtedness of the Company Entities as of the Closing Date set forth in the Leakage/Indebtedness Certificate by wire transfer of immediately available funds to Seller’s account as provided on Exhibit B ; and

(ii) The Parties shall deliver, or cause to be delivered, to the other Parties the certificates and other deliverables pursuant to Article 7 and Article 8 .

2.04 Aggregate Net Working Capital Adjustment Amount .

(a) Prior to the earlier of (x) the date that is five (5) Business Days prior to the scheduled Closing Date and (y) the date that is five (5) Business Days after completion of the audit contemplated by Section 5.13 , Seller will prepare and deliver to Purchaser a worksheet setting forth Seller’s good faith estimate of the Aggregate Net Working Capital Amount as of the Balance Sheet Effective Date (the “ Estimated Aggregate Net Working Capital Amount ”), as well as a computation thereof (which computation shall be prepared (i) in accordance with GAAP and (ii) to the extent not inconsistent with GAAP, the Company Accounting Principles).

(b) Within sixty (60) days after the Closing Date, Purchaser will prepare (at Purchaser’s expense) and deliver to Seller a worksheet setting forth Purchaser’s good faith computation of the actual Aggregate Net Working Capital Amount as of the Balance Sheet Effective Date (the “ Proposed Aggregate Net Working Capital Amount ”), which computation shall be prepared (i) in accordance with GAAP and (ii) to the extent not inconsistent with GAAP, the Company Accounting Principles, together with a reasonably

detailed explanation of, and documentation reasonably sufficient to confirm the accuracy of the computation of, such Proposed Aggregate Net Working Capital Amount. If within thirty (30) days following delivery of such worksheet and supporting documentation, Seller does not object in writing thereto to Purchaser, then the Proposed Aggregate Net Working Capital Amount shall constitute the actual Aggregate Net Working Capital Amount as of the Closing Date for purposes of this Agreement (the “ Final Aggregate Net Working Capital Amount ”). If, within thirty (30) days following delivery of such worksheet and supporting documentation, Seller objects in writing thereto to Purchaser (describing in reasonable detail the specific line items and values that are in dispute and the reasons for such dispute, and proposing alternative values with respect to such specific line items) such Proposed Aggregate Net Working Capital Amount shall be subject to the objection and resolution provisions set forth in Section 2.04(e) below.

(c) If the Proposed Aggregate Net Working Capital Amount is not prepared and delivered by Purchaser within the sixty (60) day period set forth in Section 2.04(b) above, Seller shall be entitled (but not obligated) during the sixty (60) day period commencing on the sixty-first (61 ^st ) day after the Closing Date to prepare (at Seller’s expense) and deliver to Purchaser a worksheet setting forth Seller’s good faith computation of the Proposed Aggregate Net Working Capital Amount, which computation shall be prepared in the same format and on the same basis used to prepare the Estimated Aggregate Net Working Capital Amount, and based upon information available to Seller, and accompanied by the documentation that supports Seller’s determinations and calculations. If within ten (10) days following delivery of such worksheet and supporting documentation, Purchaser does not object in writing thereto to Seller, then the Proposed Aggregate Net Working Capital Amount submitted by Seller pursuant to this Section 2.04(c) shall constitute the Final Aggregate Net Working Capital Amount. If, within ten (10) days following delivery of such worksheet and supporting documentation, Purchaser objects in writing thereto to Seller (describing in reasonable detail the specific line items and values that are in dispute and the reasons for such dispute, and proposing alternative values with respect to such specific line items), such Proposed Aggregate Net Working Capital Amount shall be subject to the objection and resolution provisions set forth in Section 2.04(e) below.

(d) If neither Purchaser nor Seller prepare and timely deliver a Proposed Aggregate Net Working Capital Amount in accordance with Section 2.04(b) or (c) , above, the Estimated Aggregate Net Working Capital Amount delivered at Closing shall become the Final Aggregate Net Working Capital Amount for all purposes hereunder.

(e) If Seller timely objects to Purchaser’s Proposed Aggregate Net Working Capital Amount pursuant to Section 2.04(b) or if Purchaser timely objects to Seller’s Proposed Aggregate Net Working Capital Amount pursuant to Section 2.04(c) , then Purchaser and Seller shall negotiate in good faith and attempt to resolve the particular items and values that are identified in the applicable written notice of objection over a twenty (20) day period commencing on delivery of written notice of objection pursuant to Section 2.04(b) or (c) , as the case may be. Should such negotiations not result in an agreement as to the Final Aggregate Net Working Capital Amount within such twenty (20) day period (or such longer period as Purchaser and Seller may mutually agree), then either Purchaser or Seller may submit such disputed items and values to the Neutral Auditor. Each Party agrees to promptly

execute a reasonable engagement letter, if requested to do so by the Neutral Auditor. Purchaser and Seller, and their respective Representatives, shall cooperate fully with the Neutral Auditor. The Neutral Auditor, acting as an expert and not an arbitrator, shall resolve such disputed items and determine the values to be ascribed thereto, and using those values (together with other items not in dispute) determine the Final Aggregate Net Working Capital Amount as of the Closing Date only (prepared on the same basis used to prepare the Estimated Aggregate Net Working Capital Amount). The Parties hereby agree that the Neutral Auditor shall only decide the specific disputed items, the values ascribed thereto and using those values (together with the other items included in the applicable Proposed Aggregate Net Working Capital Amount) determine the Final Aggregate Net Working Capital Amount, and the Neutral Auditor’s decision with respect to such disputed items and values must be within the range of values assigned to each such item in the applicable Proposed Aggregate Net Working Capital Amount and the notice of objection, respectively. All fees and expenses relating to the work, if any, to be performed by the Neutral Auditor will be borne equally by Purchaser and Seller. The Neutral Auditor shall be directed to resolve the disputed items and amounts and deliver to Purchaser and Seller a written determination of the Final Aggregate Net Working Capital Amount (such determination to be made consistent with this Section 2.04(e) , including a worksheet setting forth all material calculations used in arriving at such determination and to be based solely on information provided to the Neutral Auditor by Purchaser and Seller) within thirty (30) days after being retained (or such longer period as the Neutral Auditor may reasonably require), which determination will be final, binding and conclusive on the Parties and their respective Affiliates and representatives, successors and assigns. Notwithstanding anything herein to the contrary, the dispute resolution mechanism contained in this Section ý2.04(e) shall be the exclusive mechanism for resolving disputes, if any, regarding the Aggregate Net Working Capital, if any, and neither Seller nor Purchaser shall be entitled to indemnification pursuant to Article 11 for Losses resulting or arising from the amount of the Aggregate Net Working Capital Amount or the determination of Aggregate Net Working Capital.

(f) The “ Post-Closing Aggregate Net Working Capital Adjustment Amount ” shall be the amount equal to (i) the Final Aggregate Net Working Capital Amount minus (ii) the Estimated Aggregate Net Working Capital Amount. If the Post-Closing Aggregate Net Working Capital Adjustment Amount is a positive amount, then Purchaser shall pay in cash to Seller the amount of the Post-Closing Aggregate Net Working Capital Adjustment Amount. If the Post-Closing Aggregate Net Working Capital Adjustment Amount is a negative amount, then Seller shall pay in cash to Purchaser the amount equal to the absolute value of the Post-Closing Aggregate Net Working Capital Adjustment Amount. Any such net excess or deficit payment in respect of the Final Aggregate Net Working Capital Amount will be due and payable within fifteen (15) days after the Final Aggregate Net Working Capital Amount is finally determined as provided in this Section 2.04 and will be payable by wire transfer of immediately available funds to such account or accounts as shall be specified by Purchaser or Seller, as applicable. Any payments made pursuant to this Section 2.04(f) shall be treated as an adjustment to the Purchase Price by the parties for Tax purposes, unless otherwise required by applicable Law.

(g) Following the Closing, Seller and Purchaser shall cooperate and provide each other and, if applicable the Neutral Auditor, and their respective representatives,

reasonable assistance and access to such books, records and employees (including those of the Company and the Subsidiaries) as are reasonably requested in connection with the matters addressed in this Section 2.04 . Consistent with the foregoing, if Purchaser prepares the worksheet in accordance with Section 2.04(b) , Purchaser shall, at its expense, provide or provide reasonable access (in a manner not unreasonably disruptive to its business) to Seller or the Neutral Auditor to review the books and records, documents and work papers related to the preparation of the worksheet and computation of the Final Aggregate Net Working Capital Amount and if Seller prepares the worksheet in accordance with Section 2.04(c) , then Seller shall, at its expense, provide or provide reasonable access (in a manner not unreasonably disruptive to its business) to Purchaser or the Neutral Auditor to review the books and records, documents and work papers related to the preparation of the worksheet and computation of the Final Aggregate Net Working Capital Amount. If Purchaser prepares the worksheet in accordance with Section 2.04(b) , Seller and the Neutral Auditor shall be entitled to make reasonable inquiries and information requests of Purchaser regarding the worksheet setting forth the computation of the Final Aggregate Net Working Capital Amount and the calculations set forth therein and if Seller prepares the worksheet in accordance with Section 2.04(c) , Purchaser and the Neutral Auditor shall be entitled to make reasonable inquiries and information requests of Seller regarding the worksheet setting forth the computation of the Final Aggregate Net Working Capital Amount and the calculations set forth therein.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF

SELLER AND THE COMPANY

Seller and the Company each hereby represents and warrants to Purchaser as of the Effective Date and as of the Closing Date (unless specifically stated otherwise), as to the Company with respect to itself and the Subsidiaries only (and not with respect to the Seller), as follows:

3.01 Existence . Seller is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware. Each of Seller and the Company has full power and authority to execute and deliver this Agreement and any other agreements to be executed and delivered by such Person hereunder, and to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby, including, in the case of Seller, to own, hold, sell and transfer the Acquired Interests.

3.02 Authority . All actions or proceedings necessary to authorize the execution and delivery by Seller and the Company of this Agreement and the performance by such Person of its obligations hereunder, have been duly and validly taken. This Agreement has been duly and validly executed and delivered by Seller and the Company and constitutes the legal, valid and binding obligations of Seller and the Company enforceable against Seller and the Company in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, arrangement, moratorium or other similar Laws relating to or affecting the rights of creditors generally, or by general equitable principles.

3.03 No Consent . Except as set forth on Schedule 3.03 of the Disclosure Schedules

(the “ Seller Consents ”), the execution, delivery and performance by each of Seller and the Company of this Agreement does not require Seller or any Company Entity to obtain any consent, approval or action of or give any notice to any Person as a result or under any terms, conditions or provisions of any material Contract or material Permit by which it is bound. Without limiting the generality of the foregoing, the execution, delivery and performance of this Agreement will not require Seller or any Company Entity to obtain any consent, approval or action of or give any notice to any Person as a result or under any terms, conditions or provisions of the Contract listed in item (l)(1) of Schedule 3.12(a).

3.04 No Conflicts . The execution, delivery and performance of this Agreement by each of Seller and the Company does not and will not (a) conflict with, result in a breach of, or constitute (including with due notice or the passage of time) a default under, Seller’s certificate of incorporation or bylaws or the Company’s certificate of formation or operating agreement; (b) conflict with, result in a breach of, or constitute (including with due notice or the passage of time) a default under, any material Contract to which Seller, or Company Contract to which the Company or any Subsidiary, is a party; (c) result in the creation of any Lien upon any of the Acquired Interests or assets or properties of the Company or any Subsidiary; (d) accelerate or modify, or give any party the right to accelerate or modify, the time within which, or the terms under which, any duties or obligations are to be performed by Seller, the Company or any Subsidiary or any rights or benefits are to be received by any Person (including any penalty, premium or other obligation to arise or accrue), under any Contract to which Seller, the Company or any Subsidiary is a party; or (e) assuming receipt of the Consents specified in Section 3.05 and compliance with the HSR Act, violate any Law or Order to which Seller or any Company Entity is subject, except in the case or clauses (b) through (e) for such violations as would not, individually or in the aggregate, have a Material Adverse Effect on the Company Entities.

3.05 Regulatory Matters . No Governmental Approval on the part of Seller, the Company or any Subsidiary is required in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby, other than (a) required filings under the HSR Act, (b) requirements of any applicable provisions of the Securities Act or any other applicable securities Laws, (c) Consents required pursuant to the FPA as described in Section 7.09 , (d) Consents set forth on Schedule 3.05 (“ Seller Approvals ”), (e) Consents that, if not obtained or made, would not be material to the Business, taken as a whole, (f) Consents that have already been obtained, or (g) requirements applicable as a result of the specific legal or regulatory status of Purchaser or any of its Affiliates or as a result of any other facts that specifically relate to the business or activities in which Purchaser or any of its Affiliates are or propose to be engaged, other than the Business.

3.06 Legal Proceedings . Except as set forth in Schedule 3.06 , there are no Actions or Proceedings pending or, to the Knowledge of Seller, threatened, against any Company Entity that (a) affect any Company Entity or any of their assets or properties, including pertaining to condemnation or eminent domain or tax assessments affecting immovable property (excluding annual determinations of Tax assessed valuation), or (b) would reasonably be expected to result in the issuance of an Order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement. No Company Entity is subject to any Order which materially restricts the operation of its business or which would

reasonably be expected to have a Material Adverse Effect on the Company Entities.

3.07 Brokers . Except as set forth on Schedule 3.07 of the Disclosure Schedules, no Person has any claim against Seller, the Company or any Subsidiary for a finder’s fee, brokerage commission or similar payment directly or indirectly in connection with the transactions contemplated by this Agreement.

3.08 Compliance with Laws . Except as set forth on Schedule 3.08 , and except for Environmental Laws (which are addressed exclusively in Section 3.15 ), each Company Entity has complied in all material respects during the last three years with and is not in material violation of, and to Seller’s Knowledge is not under investigation or threatened to be under investigation with respect to, any Law or Order applicable to its business or operations or the Business.

3.09 The Company and the Subsidiaries.

(a) Each of the Company and the Subsidiaries (except for Cottonwood Energy Company LP and Cottonwood Technology Partners LP) is a limited liability company validly existing and in good standing under the Laws of the State of Delaware and each has full power and authority to conduct its business as and to the extent now conducted and to own, use and lease its assets. Each of Cottonwood Energy Company LP and Cottonwood Technology Partners LP is a limited partnership validly existing and in good standing under the Laws of the State of Delaware and each has full power and authority to conduct its business as and to the extent now conducted and to own, use and lease its assets. The Company and the Subsidiaries are each duly qualified, licensed or admitted to do business and are in good standing in the State of Delaware and each ProjectCo is duly qualified, licensed and admitted to do business and is in good standing in the jurisdictions set forth on Schedule 3.09(a) , which are the only jurisdictions in which the ownership, use or leasing of their assets, or the conduct or nature of their business, makes such qualification, licensing or admission necessary, except in those jurisdictions where the failure to be so qualified, licensed or admitted to do business would not reasonably be expected to result in a Material Adverse Effect.

(b) All of the issued and outstanding Acquired Interests of the Company are owned directly, beneficially and of record by Seller free and clear of all Liens, except as set forth on Schedule 3.09(b) . All of the issued and outstanding equity interests of Sterlington, BC Peaking, LA Generating, New Roads and Cottonwood are owned directly, beneficially and of record by the Company. All of the issued and outstanding equity interests of Bayou Peaking are owned directly, beneficially and of record by Bayou Cove. All of the issued and outstanding equity interests of those entities directly or indirectly owned by Cottonwood are owned beneficially and of record as more fully set forth on Schedule 1.01(a) . All of the Acquired Interests have been duly authorized, validly issued and are fully paid and non-assessable and have been issued in compliance with federal and state securities laws.

(c) There are no and have not been any material violations or breaches by any Company Entity or, to the Knowledge of Seller, any other party, to the Constitutive Documents. No Company Entity or, to the Knowledge of Seller, any other party, has given

or received notice or other communication regarding any actual, alleged, possible or potential material violation or material breach of any Constitutive Document since the date of formation with respect to the Company and the Subsidiaries.

(d) There are no outstanding Options issued or granted by, or binding upon any Company Entity for any Person to purchase or sell or otherwise acquire or dispose of any equity interest or other security or interest in such Company Entity, other than Purchaser’s rights under this Agreement. Except as set forth on Schedule 3.09(d) , none of the Acquired Interests or the membership interests of the Subsidiaries are subject to any voting trust or voting trust agreement, voting agreement, pledge agreement, buy-sell agreement, right of first refusal, preemptive right or proxy.

(e) Except as set forth in Section 3.09(b) , neither the Company nor the Subsidiaries have any other subsidiaries, equity interests, interests in joint ventures or general or limited partnerships or other investment or portfolio assets of a similar nature.

(f) Neither the Company nor the Subsidiaries conduct (i) any business other than the development, ownership, operation and management of the Projects or (ii) any operations other than those incidental to the ownership, operation, and management of the Projects.

(g) The books and records of the Company and the Subsidiaries are (i) in all material respects, accurate and complete and have been maintained in accordance with good business practices and (ii) state in reasonable detail and accurately and fairly reflect the activities and transactions of the Company and the Subsidiaries.

(h) The delivery of certificates representing the Acquired Interests, duly endorsed for transfer to Purchaser or accompanied by one or more membership interest powers duly endorsed for transfer to Purchaser will transfer to Purchaser good, valid and marketable title to the Acquired Interests, free and clear of all Liens, except as set forth in Schedule 3.09(b) .

3.10 No Undisclosed Liabilities. The Company Entities have (i) no Liabilities that would be required under GAAP to be reflected or reserved against in a balance sheet of the Company Entities that are material to the financial position of the Company Entities, and (ii) to the Knowledge of Seller, no Liabilities that are material to the financial position of the Company Entities, in each case except for (a) Liabilities set forth, reflected in, reserved against or disclosed in the December 31, 2017 financial statements included in the Financial Statements, (b) Liabilities incurred in the ordinary course of business consistent with past practice since December 31, 2017, (c) Liabilities under any Company Contract (other than as a result of a breach thereof by such Company Entity), and (d) Liabilities incurred in connection with the consummation of the transactions contemplated hereby.

3.11 Taxes .

(a) Except as set forth in Schedule 3.11 :

(i) Each Company Entity has timely filed, or caused to be timely filed,

all Tax Returns it was required to file on or prior to the date hereof.

(ii) All such Tax Returns are complete and accurate.

(iii) All Taxes due and owing by the Company Entities have been paid.

(iv) There are no Liens for Taxes on any of the assets of any Company Entity other than Permitted Liens.

(v) None of the Company Entities is currently taking advantage of an extension of time to file any Tax Return and no such extensions have been requested with respect to any Tax Returns currently due or pending.

(vi) There are no outstanding agreements or waivers extending the statutory period of limitations applicable to the assessment of any Tax against the Company Entities nor has any request been made in writing for any such extension or waiver.

(vii) Each Company Entity has been treated as a disregarded entity for U.S. federal income tax purposes at all times since its formation. No election has ever been filed to treat any Company Entity as an association taxable as a corporation for U.S. federal income Tax purposes.

(viii) The Company Entities are not members of any consolidated, combined, affiliated or unitary group of persons for purposes of determining income Tax liability or filing any tax returns.

(ix) No deficiencies for Taxes of the Company Entities or with respect to the Business or the Projects have been claimed, proposed or assessed by any Governmental Authority that have not been paid or finally determined by such Governmental Authority or a court of competent jurisdiction not to be due or payable or otherwise satisfied.

(x) There are no pending or threatened audits, examinations, assessments or other actions for or relating to any liability in respect of Taxes for which the Company Entities, the Business or the Projects might be liable and there are no matters under discussion with any Governmental Authority or otherwise known to the Seller with respect to Taxes that are likely to result in additional liabilities of the Company Entities, the Business or the Projects for Taxes. No closing agreements with the IRS or any other taxing authority have been entered into by or with respect to the Company Entities, the Business or the Projects.

(xi) No claim has ever been made by a Governmental Authority in a jurisdiction where a Company Entity does not file a Tax Return that it is or may be subject to Taxation by that jurisdiction with respect to the Taxes that would be the subject of such Tax Return.

(xii) There are no Tax sharing agreements or similar arrangements between any of the Company Entities and non-affiliates and no Company Entity shall have any liability under such Tax sharing agreements or similar arrangements.

(xiii) The Company Entities have delivered or made available to Purchaser complete and accurate copies of all Tax Returns for all taxable years since December 31, 2013 and complete and accurate copies of all examination reports and statements of deficiencies assessed against the Company Entities, the Business or the Projects since December 31, 2013.

(xiv) The Company Entities and the Seller (to the extent relating to the Company Entities, the Business or the Projects) have withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party.

(xv) The contracts, agreements, obligations and governance documents, including but not limited to the partnership agreement or operating agreement of any Company Entity taxed as a partnership for federal income tax purposes, do not now and shall not at Closing contain any provision of any kind that would preclude an election to step up the basis of the Company Entity’s assets under section 754 of the Code or any other applicable provision of state, local or foreign Law by the Purchaser, its Affiliates or any other transferee.

(xvi) Neither the Company Entities nor the Seller (with respect to the Company Entities, the Business or the Projects) have requested or received any private letter ruling of the IRS or comparable rulings or guidance issued by any other taxing authority.

(xvii) No Company Entity will be required to include any item of income in, or exclude any item of deduction from, taxable income for any period or portion thereof beginning after the Closing Date as a result of any (i) installment sale or open transaction disposition made at or prior to the Closing, (ii) prepaid amount received at or prior to the Closing, or (iii) change in accounting method made prior to Closing that would be applicable to a period or portion thereof beginning after the Closing Date.

(b) No representation is being made about the income tax characteristics of any Project (including eligibility for tax credits or depreciation allowances for which such Project may qualify). The representations and warranties set forth in this Section 3.11 (i) are made only with respect to Tax periods and portions thereof ending on or prior to the Closing Date and (ii) shall not be construed as a representation or warranty, and shall not be relied upon for any claim of indemnification with respect to, any Taxes attributable to any Tax period (or portion thereof) beginning after the Closing Date, or any Tax positions taken by the Purchaser or its Affiliates (including the Company Entities) in any Tax period (or portion thereof) beginning after the Closing Date, except to the extent provided by the representations and warranties in Sections 3.11 (vii), (xv), and (xvii).

3.12 The Company Contracts.

(a) Schedule 3.12(a) contains true, correct and complete list of all the Company Contracts and all amendments, modifications and supplements thereto. Each Company Contract constitutes the legal, valid, binding and enforceable obligation of the Company or the Subsidiary party thereto and to the Knowledge of Seller, the other parties thereto, except as may be limited by (i) bankruptcy, insolvency, reorganization, moratorium

and other similar laws of general application affecting the rights and remedies of creditors, and (ii) general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law). Each Company Contract is in full force and effect, except to the extent such non-compliance would not reasonably be expected to have a Material Adverse Effect.

(b) Except as disclosed on Schedule 3.12(b) , no Company Entity, nor to Seller’s Knowledge, any of the other parties thereto is in material breach, violation or default, and, to Seller’s Knowledge, no event has occurred which with notice or lapse of time or both would constitute any such material breach, violation or default, or permit termination, modification, or acceleration by such other parties, under such Company Contract.

3.13 Real Property .

(a) All material real property owned by each Company Entity (the “ Owned Real Property ”) or to which such Company Entity has rights under leases, easements, rights of way, licenses, common use agreements or similar agreements (the “ Other Real Property ”) is described in Schedule 3.13 . The Real Property is sufficient to enable the Company Entities to conduct the Business. The Parties acknowledge and agree that the Oxbow Property will not be included in the transactions contemplated by this Agreement and that Seller, pursuant to Section 5.12 , shall cause the Oxbow Property to be transferred by the Company Entities to Seller or an Affiliate of Seller (other than any Company Entity) prior to the Closing and that, subject to such transfer, Schedule 3.13 shall be deemed to be updated to exclude the Oxbow Property.

(b) The agreements listed on Schedule 3.13 are all the material leases, easements, rights of way, licenses, common use agreements or similar agreements under which the Company Entities have rights to the Real Property (the “ Project Site Agreements ”). Each Project Site Agreement is in full force and effect and is the legal, valid and binding obligation of the Company Entity which is a party to such Project Site Agreement, subject to (a) applicable bankruptcy, insolvency, reorganization, moratorium, and other Laws of general application, heretofore or hereafter enacted or in effect, affecting the rights and remedies of creditors generally, and (b) the exercise of judicial or administrative discretion in accordance with general equitable principles, particularly as to the availability of the remedy of specific performance or other injunctive relief, and, to Seller’s Knowledge, the other parties thereto. Seller has provided Purchaser with copies of all Project Site Agreements. Neither Seller nor any Company Entity has been informed in writing by any other party to any Project Site Agreement that the respective Company Entity is in material breach of its obligations with respect to such Project Site Agreement.

(c) Each Company Entity is in possession of all of its Owned Real Property and Other Real Property and has adequate rights of ingress and egress with respect thereto, including to all buildings, structures, facilities and other improvement thereon.

3.14 Title . Seller has provided Purchaser with, or access to, a true and correct copy of all title policies covering the Real Property (the “ Title Policies ”). Each Company Entity has good and marketable title (ownership and record title) to all Owned Real Property, and valid and

subsisting rights in the Other Real Property, in each case subject only to (a) Permitted Liens, (b) matters disclosed in the Title Policies, and (c) matters consented to in writing by Purchaser.

3.15 Environmental . This Section 3.15 shall constitute the sole representations of Seller with respect to environmental matters. Except as set forth on Schedule 3.15 :

(a) Except as would not reasonably be expected to result in Losses greater than one million dollar individually ($1,000,000) or two million dollars ($2,000,000) in the aggregate:

(i) (A) each Company Entity and each Project has complied in all material respects during the last five (5) years with and is in material compliance with applicable Environmental Laws, Permits issued pursuant to Environmental Laws, and environmental Orders (including Laws requiring a Company Entity to obtain, maintain, and comply with Permits), and (B) no Company Entity has received any written notice, notification, demand, citation or inquiry which remains uncured, no penalty has been assessed, and no Action or Proceeding is pending or threatened in writing from any Governmental Authority or other Person alleging that any Company Entity or any Project is in violation of any Environmental Laws, Permits issued pursuant to Environmental Laws or environmental Orders;

(ii) the Company Entities possess all material Permits currently required under applicable Environmental Laws to conduct the Business as conducted and operated during the 12-month period immediately prior to the date hereof, and each such Permit is valid and in full force and effect, not subject to any pending challenge or modification, and the applicable Company Entity is in compliance in all material respects with all its obligations with respect thereto and all applications for the renewal of such Permits have been duly filed on a timely basis with the appropriate Governmental Authority;

(iii) neither any Company Entity nor any Project is subject to any outstanding Order pursuant to any Environmental Law, nor is in receipt of any written notice, pending complaint or claim seeking to impose an Environmental Liability against any Company Entity or, within the last five (5) years, a request for information pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act, Section 114 of the Clean Air Act or similar state Environmental Laws from a Governmental Authority, which arises from any Real Property or the operation of any Project, and no event has occurred that requires the revocation, suspension, limitation, adverse modification or termination of any Permit issued pursuant to Environmental Laws;

(iv) no Company Entity has arranged for, consented to the disposal of or Released any Hazardous Substances as a result of the operation of any Project in a manner that has given or gives rise to Environmental Liability for any Company Entity or requires investigation or remediation under Environmental Laws; and

(v) there has not been at any time any (1) presence of, Release of or off-site shipment of any Hazardous Substances by the Company Entities that has given or could give rise to Environmental Liabilities or obligations under any Environmental Laws or (2) landfill, underground or aboveground storage tanks, underground piping, surface impoundments,

disposal areas on, under, at or in any way affecting any Project that has given or could give rise to Environmental Liability or obligation under any Environmental Laws. All activity to close, remove, remediate or dispose of any landfills, underground or aboveground storage tanks, surface impoundments or disposal areas by any Company Entity has been conducted in material compliance with Environmental Laws.

(b) None of the Company Entities has assumed by contract, agreement (including any administrative order, consent agreement, lease or sale-leaseback) or operation of law, or otherwise agreed to (i) indemnify or hold harmless any other Person for any violation of Environmental Laws or Permits issued pursuant to Environmental Laws or any obligation or liability arising thereunder or (ii) assume any liability for any Release of any Hazardous Substance or implement institutional controls (including any deed restrictions) regarding any Hazardous Substance, and to the extent that any of the Company Entities is subject to any such agreement in subparts (i) or (ii) of this Section 3.15(b) , it has no outstanding obligations.

(c) None of the Company Entities has entered into any Contract or commitment to transfer or sell any emission allowances or credits issued to any of the Company Entities.

(d) To Seller’s Knowledge, Seller has delivered to Purchaser complete copies and results of all material environmental reports (including Phase I and Phase II environmental site assessments and letter reports), investigations, disclosures, studies, sampling results, analyses, assessments, tests, plans, and audits that relate to the business of the Company Entities and address any environmental, health and safety matters or liabilities, including those arising under any Environmental Laws or relating to the use, storage, treatment, transportation, manufacture, handling, production, or release of any Hazardous Substance.

3.16 Permits . The Company Entities have all Permits required to conduct the Business as currently conducted and operated on the date hereof, except where the failure to have or obtain such Permits would not materially restrict the operation of the Business. Without limiting the preceding sentence, the Permits listed on Schedule 3.16 comprise all the Permits required by Law to, in all material respects own and operate the Projects and the Business, in the manner owned and operated during the 12-month period immediately prior to the date hereof. To Seller’s Knowledge, each such Permit is valid and in full force and effect and the applicable Company Entity is in compliance in all material respects with all its obligations with respect thereto. There are no proceedings pending or, to Seller’s Knowledge, threatened which would reasonably be expected to result in the revocation or termination of any material Permit of any Company Entity, and, to Seller’s Knowledge, no event has occurred that permits or requires the revocation, suspension, limitation or termination of, or the adverse modification, suspension, impairment or limitation in any material respect of, any material Permit of any Company Entity. Seller makes no representation or warranty in this Section 3.16 with respect to Permits required under any Environmental Law, which Permits are addressed in Section 3.15(a)(ii) .

3.17 Affiliate Transactions . Except as disclosed on Schedule 3.17 of the Disclosure Schedules or under the Company Contracts, and except for this Agreement, there are no existing

transactions, Contracts or Liabilities between or among the Company or any Subsidiary on the one hand, and Seller or any of Seller’s Affiliates on the other hand.

3.18 Intellectual Property.

(a) Except as set forth in Schedule 3.18 of the Disclosure Schedules, there is not now and has not been during the past three (3) years any infringement or misappropriation by Seller of any valid patent, trademark, trade name, servicemark, copyright, trade secret or similar intellectual property which relates to the Acquired Interests or the assets of the Company or any Subsidiary and which is owned by any third party, and there is not now any existing or, to the Knowledge of Seller, threatened claim against Seller of infringement or misappropriation of any patent, trademark, trade name, servicemark, copyright trade secret or similar intellectual property which directly relates to the Acquired Interests or the assets of the Company or any Company Entity and which is owned by any third party.

(b) Each of the Company Entities owns or has the valid right to use pursuant to license, sublicense, agreement or permission, in each case free and clear of all Liens other than Permitted Liens, any intellectual property necessary for it to conduct the Business, other than such intellectual property the absence of which ownership or the right to use would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(c) There is no pending or, to the Knowledge of Seller, threatened claim by Seller against others for infringement or misappropriation of any trademark, trade name, servicemark, copyright, trade secret or similar intellectual property owned by Seller and which is utilized in the conduct of the Business.

(d) Except as set forth on Schedule 3.18 , to the Knowledge of Seller, the information and communications technologies, including all of the material computer hardware, data processing systems, computer software, networks and other peripherals used by any Company Entity in the Business (“ IT Systems ”) are owned by or licensed under third party contracts to such Company Entity. To the Knowledge of Seller, the Company Entities have taken conversely reasonable precautions to preserve the availability, security and integrity of the IT Systems and the data and information stored on the IT Systems. Other than for systems with respect to which Seller is providing transition services pursuant to the transition services agreement contemplated by Section 7.11(v), to the Knowledge of Seller, the IT Systems are sufficient in all material respects for the conduct of the business of the Company Entities as currently conducted.

3.19 Insurance .

(a) Schedule 3.19 of the Disclosure Schedules contains a true, correct and complete list of all insurance policies as of the date of this Agreement that insure the assets and properties and Business of the Company Entities or affect or relate to the ownership of any of the assets and properties of the Company Entities. Seller has provided the Purchaser with, or access to, detailed summaries of all the insurance policies set forth on Schedule 3.19 of the Disclosure Schedules. All such insurance policies are in full force and effect and all

premiums due and payable on such insurance policies have either been paid or, if due and payable prior to Closing, will be paid prior to Closing in accordance with the payment terms thereof. None of Seller or any Company Entity has received any notice with respect to the assets and properties and Business of the Company Entities from any insurer under any insurance policy applicable to the assets and properties and business of the Company Entities disputing or disclaiming coverage, reserving rights with respect to a particular claim or such policy in general, or canceling or materially amending any such policy. All terms of such policies have been complied with by Seller and the Company Entities, as applicable, in all material respects. The insurance maintained by or on behalf of the Company Entities is adequate to comply with all applicable Laws and Company Contracts. Except as set forth on Schedule 3.19 of the Disclosure Schedules, there are no pending insurance claims.

(b) Except as set forth on Schedule 3.19(b) , all claims or incidents that may give rise to a claim under an insurance policy of any Company Entity have been reported to such insurer. Schedule 3.19(b) contains a true, correct and complete list of all insurance policies as of the date of this Agreement that are held in the name of Seller or any Company Entity and that will transfer to the Purchaser post-Closing under Section 5.05 .

3.20 Financial Statements . Schedule 3.20 sets forth the unaudited combined balance sheet for the Business as of September 30, 2017 (the “ Balance Sheet Date ”) and December 31, 2017, and the related income statements for the nine (9)-month period and twelve (12)-month period then-ended (the September 30, 2017 and December 31, 2017 financial statements, collectively, the “ Year End Financial Statements ”). The Year End Financial Statements and the unaudited financial statements as of and for the years ended December 31, 2016 and 2015, including balance sheets and the related statements of income, comprehensive income, changes in stockholders’ equity and cash flows (collectively with the Year End Financial Statements, the “ Financial Statements ”) (i) fairly present, in all material respects, the consolidated financial position and consolidated results of operations of the Company Entities, as of the respective dates set forth therein, (ii) have been prepared all in conformity with GAAP consistently applied during the period(s) involved except as otherwise noted therein, subject to normal and recurring year-end adjustments that have not been and are not expected to be material in amount, and (iii) have been prepared from the books and records of the Company Entities.

3.21 Absence of Certain Changes .

(a) Since the Balance Sheet Date, and through the date hereof, each Company Entity has conducted its respective business in the ordinary course, and there has not been (i) any damage, destruction or loss, whether or not covered by insurance, that would, individually or in the aggregate, have a Material Adverse Effect on the Company Entities or the Business, (ii) any declaration, setting aside or payment of any non-cash or in-kind dividend or other distribution of property other than cash or cash equivalents with respect to the Acquired Interests or (iii) any change in accounting methods, principles or practices affecting the Company Entities, except as required by GAAP.

(b) Since the Balance Sheet Date, except as contemplated by this Agreement there has not been any event or development that would, individually or in the aggregate, have a Material Adverse Effect on the Company Entities or the Business.

(c) Except as set forth on Schedule 3.21(c) , from December 31, 2017, through the Effective Date, neither Seller nor any Company Entity has taken any action that would be prohibited by Section 5.04 or Section 5.07 (without regard to the time period referenced in those sections); provided that, solely for purposes of this Section 3.21(c) , the Lockbox Period shall begin on February 1, 2018 and not January 1, 2018.

3.22 Regulatory Status .

(a) Each of Sterlington, BC Peaking, LA Generating, Bayou Peaking and Cottonwood Energy (each, an “ EWG Company ” and collectively, the “ EWG Companies ”) is an “exempt wholesale generator” under PUHCA and FERC’s implementing regulations. Each EWG Company is authorized by FERC to make sales of energy, capacity, and ancillary services at market-based rates pursuant to Section 205 of the FPA, has blanket authorization from FERC under Section 204 of the FPA to issue securities and assume liabilities, and has all other blanket authorizations and waivers from FERC that are customarily granted by FERC to entities with market-based rate authorization. Except for its market-based rate tariff, no EWG Company has any other tariff or rate schedule on file with FERC and is not required to have any other tariffs or rate schedules on file with FERC, except as set forth on Schedule 3.22(a) . Each of the Company, NRG Bayou Cove LLC and Cottonwood is a “holding company” as defined in PUHCA solely because of its ownership of the applicable Subsidiary which it owns, and, as such, is exempt from regulation under PUHCA as set forth in 18 C.F.R. § 366.3(a).

(b) Cottonwood Energy is registered with NERC as a “Generator Owner” and “Generator Operator” with respect to the Cottonwood Project, and LA Generating (NCR 01265) is registered with NERC as a “Generator Owner” and “Generator Operator” with respect to the LA Generating Projects, the Sterlington Project, the BC I Peaking Project, and the Bayou Project. Each of Cottonwood Energy and LA Generating is in compliance with all requirements applicable to such registrations. Other than the foregoing registrations by Cottonwood Energy and LA Generating with respect to the Projects, to the Knowledge of Seller, no other entity is registered with NERC with respect to the Projects.

3.23 Support Obligations . Schedule 3.23 sets forth a true and complete list of all of the Support Obligations.

3.24 Employee and Benefit Matters

(a) A list of all Business Employees is set forth on Schedule 3.24(a) , together with their employer of record, title, position, work location, annual base salary or hourly rate, bonus eligibility, date of hire, years of service, full-time or part-time status, exempt or non-exempt status, union status (including union local) and leave status (type of leave, date leave began and expected return date), which list shall be updated as of five Business Days prior to the Closing. No Company Entity has any employees or has had any employees during the past five (5) years.

(b) Except as disclosed on Schedule 3.24(b) , (i) no Business Employee is represented by a labor union or other labor organization and (ii) there is no Collective

Bargaining Agreement covering any Business Employees, and no such Collective Bargaining Agreement is being negotiated. In addition, except as disclosed on Schedule 3.24(b) , during the past three years: (i) no petition has been filed or proceedings instituted by any labor union or other labor organization with any Governmental Authority seeking recognition as the bargaining representative of any Business Employee or group of Business Employees; (ii) no demand for recognition of Business Employees has been made by, or on behalf of, any labor union or other labor organization; (iii) no strike, work stoppage, lockout, picketing, arbitration, material grievance or other material adverse labor event involving any Business Employees or any other current or former employees, applicants, or independent contractors providing or that have provided services to the Company or the Subsidiaries has occurred and, to Seller's Knowledge, no such event is threatened; (iv) no unfair labor practice charge against Seller or any of its Affiliates involving any Business Employees or any other current or former employees, applicants, or independent contractors providing or that have provided services to the Company or the Subsidiaries has been filed or is pending before the National Labor Relations Board or any other labor relations authority; (v) there is no pending or, to Seller's Knowledge, threatened legal action by or before any Governmental Authority with respect to any Business Employees or any other current or former employees, applicants or independent contractors providing or that have provided services to the Company or any of the Subsidiaries; (vi) the Seller and its Affiliates are and have been in material compliance with all material Laws related to employment, employment practices, wages, hours, immigration, employment taxes and withholding, equal employment, prohibited discrimination, and other terms and conditions of employment (including affirmative action obligations, occupational health and safety and the classification and compensation of employees and independent contractors for purposes of the Fair Labor Standards Act and similar state Laws with respect to any Business Employees or any other current or former employees, applicants, or independent contractors providing or that have provided services to the Company or the Subsidiaries); and (vii) neither the Seller, any of its Affiliates, the Company nor any of the Subsidiaries or the Purchaser will incur any notice, information, consultation, consent or similar obligations with respect to any labor union, works council or other employee representative body in connection with the execution of this Agreement or the Transactions. To the Seller’s Knowledge, there is no effort currently being made or threatened by, or on behalf of, any labor union or other labor organization to organize any Business Employees.

(c) There has been no action, during the past three (3) years, that would trigger notice or other obligations to any Business Employees under the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §2109 et seq. or the regulations promulgated thereunder (the “ WARN Act ”) or similar Law.

(d) Except for such violations or failures as would not, individually or in the aggregate, materially affect the Company Entities or the Business, each Business Employee and each other common law employee, leased employee, consultant, partner or independent contractor who has provided services to the Company or any Subsidiary has been properly classified for all purposes (including for all tax, insurance, workers compensation and benefit plan eligibility purposes) and Seller and its Affiliates have paid and where required withheld all applicable taxes, insurance premiums and other amounts due and have timely made all appropriate filings in connection with services provided by such Persons.

(e) Schedule 3.24(e) contains a complete list of each Company Employee Plan. Neither the Company nor any of its Subsidiaries sponsors, maintains or contributes to, or has any liability with respect to, any Company Employee Plan or any Controlled Group Pension Plan. None of the Company Employee Plans is a stand-alone plan maintained primarily for the benefit of Business Employees. There does not now exist, nor do any circumstances exist that could result in, any liability of the Company or any of its Subsidiaries following the Closing related to any Company Plan or any Controlled Group Pension Plan. Without limiting the generality of the foregoing, except, in the case of clauses (i) through (iii) below, for such violations or failures as would not, individually or in the aggregate, materially affect the Company Entities or the Business:

(i) neither the Company, any Subsidiary nor any ERISA Affiliate has any withdrawal liability, within the meaning of Section 4201 of ERISA, or any contingent withdrawal liability under Section 4204 of ERISA, to any Multiemployer Plan, which liability could become a liability of the Company, any Subsidiary or any ERISA Affiliate or impose any lien or encumbrance against any of the Company's, Subsidiary's or any ERISA Affiliate's assets, and the closing of the transactions contemplated by this Agreement will not cause or result in any such withdrawal liability (contingent or actual);

(ii) all contributions that the Company, any Subsidiary or any of its ERISA Affiliates are required to have made to any Company Employee Plan, Pension Plan Multiemployer Plan have been timely made; and

(iii) no liability under Title IV of ERISA has been incurred or is expected to be incurred with respect to any Controlled Group Pension Plan (other than premiums or benefits incurred and paid when due), nor has there been any “reportable event” within the meaning of Section 4043(c) of ERISA with respect to any such Controlled Group Pension Plan.

(f) Except, in the case of any representation made in this Section 3.24(f), for such violations as would not, individually or in the aggregate, materially affect the Company Entities or the Business:

(i) each Company Employee Plan has been, in all respects, administered in compliance with its terms and applicable Laws, including ERISA and the Code, as applicable;

(ii) each Company Employee Plan that is intended to be “qualified” within the meaning of Section 401(a) of the Code has received a favorable determination letter from the IRS for the most recent remedial amendment cycle or is entitled to rely upon a favorable opinion issued by the IRS for such cycle, and to Seller's Knowledge, there are no existing circumstances or any events that have occurred that could reasonably be expected to affect adversely the qualified status of any such Company Employee Plan;

(iii) there are no pending, or to Seller's Knowledge, threatened or anticipated claims (other than routine claims for benefits) by, on behalf of or against any Company Employee Plan or any trust related thereto;

(iv) no Company Employee Plan is, or within the last six (6) years has

been the subject of an audit, investigation or other proceeding by a Governmental Authority and, to the Knowledge of the Company, no audit, investigation or proceeding is threatened or anticipated with respect to such plan;

(v) Seller, its Affiliates, the Company and the Subsidiaries have satisfied all material reporting and disclosure requirements under the Code and ERISA and other Laws that are applicable to the Company Plans;

(vi) the Company has not terminated any Company Employee Plan or taken any action with respect thereto that would result in a Lien on any of the assets or properties of the Company or any Subsidiary; and

(vii) no transaction prohibited by section 406 of ERISA and no “prohibited transaction” under section 4975(c) of the Code have occurred with respect to any Company Employee Plan that has not been corrected as required by Law.

(g) None of the Business Employees is eligible for retiree welfare benefits, other than as required pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (" COBRA ") or similar state law. Seller and each ERISA Affiliates have complied in all material respects with COBRA and similar state law and neither the Company, any Subsidiary nor any ERISA Affiliate will have any successor liability pursuant to COBRA or similar state law with respect to any Company Employee Plan or any other employee plan, program, or arrangement of any ERISA Affiliate.

(h) Except as set forth on Schedule 3.24(h) , the signing of this Agreement or the consummation of the transactions contemplated by this Agreement will not, either alone or in combination with another event, (i) entitle any Business Employee, other current or former employee or other service provider to the Company or any Subsidiary to severance pay, unemployment compensation or any other payment, (ii) accelerate the time of payment or vesting, or increase the amount of compensation due to any Business Employee, other current or former employee or other service provider to the Company or any Subsidiary, (iii) directly or indirectly cause the Seller, any ERISA Affiliates, including the Company or any Subsidiary, to transfer or set aside any assets to fund any benefits under any Company Employee Plan, (iv) otherwise give rise to any material liability under any Company Employee Plan, (v) limit or restrict the right to amend, terminate or transfer the assets of any Company Employee Plan on or following the Closing or (vi) result in any payment that would constitute an “excess parachute payment” (as such term is defined in Section 280G(b)(1) of the Code) any Business Employee, other current or former employee or other service provider to the Company or any Subsidiary or that were or would not be deductible under Code Sections 162(m) or that would be required to be included by any Business Employee, other current or former employee or other service provider to the Company or any Subsidiary in gross income under Code Section 409A(a)(1)(A) as a result of a violation of Code Section 409A. Neither the Seller nor any ERISA Affiliates, including the Company or any Subsidiary, has an obligation to gross-up, indemnify or otherwise reimburse any Business Employee, other current or former employee or other service provider to the Company or any Subsidiary for any tax incurred by such service provider pursuant to Sections 280G or 409A of the Code.

(i) Except, or such violations or failures as would not, individually or in the aggregate, reasonably be expected to be material, (i) each Company Employee Plan that is a “nonqualified deferred compensation plan” (as defined in Section 409A(d)(1) of the Code) complies in all respects, in both form and operation, with the requirements of Section 409A of the Code, and (ii) no payment to be made under any Employee Plan is, or will be, subject to the penalties of Section 409A(a)(1) of the Code.

3.25 Bankruptcy . Seller has not authorized, filed, or acquiesced in the commencement of a proceeding under any bankruptcy, insolvency, reorganization or similar law, and there are no claims or proceedings pending or being contemplated by Seller or, to Seller’s Knowledge, threatened against Seller, that would reasonably be expected to result in it being or becoming subject to any bankruptcy, insolvency, reorganization or similar proceeding.

3.26 No Debt . On the Closing Date and after giving effect to the payment of the Base Purchase Price, no Company Entity shall have any outstanding Indebtedness.

3.27 Warranties . Schedule 3.27 lists all material, currently-effective, express, written warranties made or given by any Person to any Company Entity in respect of the material equipment, operation and maintenance of the Projects, including material warranties regarding title or against defects in materials or workmanship, and, to Seller’s Knowledge, such Company Entity holds and has the right to enforce all such warranties. Seller has furnished to Purchaser true, correct and complete copies of all of such warranties and any agreement or instrument assigning or transferring any such warranties.

3.28 Inventory . Each ProjectCo has on hand, and has good and valid title to, all Inventory and other tangible personal property used or held for use in the Business. The type and amount of such Inventory and other tangible personal property has since January 1, 2017 through the date hereof been, and through the Closing Date will be, materially sufficient to enable the Company Entities to conduct the Business in the ordinary course.

3.29 Projects Condition . As of the Closing, except as set forth in Schedule 3.29 , the material tangible property held by each ProjectCo will be in good operating condition and repair, subject to ordinary wear and tear, and is suitable for immediate use in the manner intended in the ordinary course of business. Except as set forth in Schedule 3.29 , to Seller’s Knowledge, none of the tangible personal property of any ProjectCo is in need of repair or replacement other than as part of routine maintenance in the ordinary course of business.

3.30 Anti-Terrorism Laws . The Seller and each of the Company Entities has not, directly or indirectly, (i) knowingly conducted any business or engaged in making or receiving any contribution of funds, goods, or services to or for the benefit of any Restricted Party, (ii) knowingly dealt in, or otherwise engaged in any transaction relating to, any property or interest in property blocked pursuant to any Anti-Terrorism Law, or (iii) knowingly engaged in or conspired to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law. To the Knowledge of Seller, the employees and agents of Seller and the Company Entities are in compliance with Anti-Terrorism Laws applicable to the Seller and the Company Entities in all material respects.

3.31 Foreign Corrupt Practices Act and Certain Payments .

(a) Neither the U.S. Government nor any other Person has notified Seller or any of the Company Entities in writing of any actual or alleged violation or breach of the Foreign Corrupt Practices Act of 1977 (the “ Foreign Corrupt Practices Act ”), nor to the Knowledge of Seller has there been any actual violation or breach thereof by Seller or any Company Entity. None of the Company Entities has undergone since January 1, 2014, or is undergoing any audit, review, inspection, investigation, survey or examination of records relating to the Company Entities’ compliance with the Foreign Corrupt Practices Act. None of the Company Entities have been since January 1, 2014, and are not now under any administrative, civil or criminal investigation or indictment and are not party to any Action or Proceeding involving alleged false statements, false claims or other improprieties relating to any of the Company Entities’ compliance with the Foreign Corrupt Practices Act, nor, to the Knowledge of Seller, is there any reasonable basis for such investigation or indictment.

(b) None of the Company Entities nor, to the Knowledge of Seller, any of their respective directors, executives or employees nor, to the Knowledge of Seller, any of the Company Entities’ respective representatives or agents, in each case acting in their capacity on behalf of any of the Company Entities, (i) has used or is using any corporate funds for any illegal contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) has used or is using any corporate funds for any direct or indirect unlawful payments to any foreign or domestic governmental officials or employees or any employees of a foreign or domestic government-owned entity, or (iii) has violated or is violating any provision of the Foreign Corrupt Practices Act or any other anticorruption Law applicable to any of the Companies, (iv) has made, offered, authorized or promised any payment, rebate, payoff, influence payment, contribution, gift, bribe, rebate, kickback, or any other thing of value to any government official or employee, political party or official, or candidate, regardless of form, to obtain favorable treatment in obtaining or retaining business or to pay for favorable treatment already secured, in each case, in violation of applicable Law, (v) has established or maintained, or is maintaining, any fund of corporate monies or other properties for the purpose of supplying funds for any of the purposes described in the foregoing clause (iv) or (vi) has made any bribe, unlawful rebate, payoff, influence payment, kickback or other similar unlawful payment of any nature. The books of account and other financial records of the Company Entities (x) in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of the Company Entities in accordance with GAAP and applicable Law and (y) represent actual, bona fide transactions.

3.32 No Other Warranties . EXCEPT FOR THE WARRANTIES SET FORTH HEREIN, THE ACQUIRED INTERESTS ARE BEING SOLD HEREUNDER ON AN “AS IS,” “WHERE IS” BASIS. THE WARRANTIES SET FORTH HEREIN ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER WARRANTIES, WHETHER STATUTORY, WRITTEN OR ORAL, EXPRESS OR IMPLIED; SELLER PROVIDES NO OTHER WARRANTIES WITH RESPECT TO THE ACQUIRED INTERESTS, THE COMPANY, THE SUBSIDIARIES, THE ASSETS OF THE COMPANY, OR THE ASSETS OF THE SUBSIDIARIES, INCLUDING WITHOUT LIMITATION, IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT, AND WARRANTIES ARISING FROM COURSE OF DEALING OR USAGE OF TRADE, ALL OF

WHICH ARE EXPRESSLY DISCLAIMED. EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE 3, SELLER MAKES NO REPRESENTATION OR WARRANTY TO PURCHASER WITH RESPECT TO ANY FINANCIAL PROJECTIONS, FORECASTS OR FORWARD LOOKING STATEMENTS OF ANY KIND OR NATURE WHATSOEVER RELATING TO THE COMPANY, THE SUBSIDIARIES, THE ASSETS OF THE COMPANY, THE ASSETS OF THE SUBSIDIARIES, OR THE ACQUIRED INTERESTS.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF

PURCHASER

Purchaser hereby represents and warrants to Seller as of the date hereof (unless specifically stated otherwise) as follows:

4.01 Existence . Purchaser is a limited liability company duly formed, validly existing and in good standing under the Laws of the State of Louisiana. Purchaser has the full power and authority to execute and deliver this Agreement and each other agreement required to be executed by it pursuant to the terms hereof, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby and to own or lease its assets and properties and to carry on its business as currently conducted.

4.02 Authority . All actions or proceedings necessary to authorize the execution and delivery by Purchaser of this Agreement, and the performance by Purchaser of its obligations hereunder, have been duly and validly taken. This Agreement has been duly and validly executed and delivered by Purchaser and constitutes the legal, valid and binding obligation of Purchaser enforceable against Purchaser in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, arrangement, moratorium or other similar Laws relating to or affecting the rights of creditors generally, or by general equitable principles.

4.03 No Consent . Except as set forth on Schedule 4.03 of the Disclosure Schedules (the “ Purchaser Consents ”), the execution, delivery and performance by Purchaser of this Agreement does not require Purchaser to obtain any consent, approval or action of or give any notice to any Person as a result or under any terms, conditions or provisions of any material Contract by which it is bound.

4.04 No Conflicts . The execution, delivery and performance of this Agreement by Purchaser does not and will not (a) conflict with, result in a breach of, or constitute a default under, Purchaser’s articles of organization or operating agreement, or any material Contract to which Purchaser is a party; (b) result in the creation of any Lien upon any of the assets or properties of Purchaser or (c) accelerate or modify, or give any party the right to accelerate or modify, the time within which, or the terms under which, any duties or obligations are to be performed by Purchaser, or any rights or benefits are to be received by any Person, under any material Contract to which Purchaser is a party; or (d) assuming receipt of the Consents described in Section 4.09 below and compliance with the HSR Act, violates any Law to which Purchaser or Purchaser Parent is subject for such violations or breaches as would not, individually or in the aggregate, have a Material Adverse Effect on Purchaser.

4.05 Permits and Filings . Except as disclosed on Schedule 4.05 of the Disclosure Schedules, no Permit on the part of Purchaser is required in connection with the execution, delivery and performance of this Agreement, the consummation of the transactions contemplated hereby or thereby or any borrowing or other action by Purchaser or Purchaser Parent in connection with obtaining or maintaining sufficient financing to provide the payment of the Purchase Price.

4.06 Legal Proceedings . There are no Actions or Proceedings pending or, to the knowledge of Purchaser, threatened as of the date of this Agreement against Purchaser that affects Purchaser or any of its assets or properties which would reasonably be expected to result in the issuance of an Order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement.

4.07 Purchase for Investment . Purchaser (a) is acquiring the Acquired Interests for its own account and not with a view to distribution, (b) is an “accredited investor” as such term is defined in Rule 501(a) under the Securities Act of 1933, (c) has sufficient knowledge and experience in financial and business matters so as to be able to evaluate the merits and risk of an investment in the Acquired Interests and is able financially to bear the risks thereof, and (d) understands that the Acquired Interests will, upon purchase, be characterized as “restricted securities” under state and federal securities laws and that under such laws and applicable regulations the Acquired Interests may be resold without registration under such laws only in certain limited circumstances. Purchaser agrees that it will not sell, convey, transfer or dispose of the Acquired Interests, unless such transaction is made pursuant to an effective registration statement under applicable federal and state securities laws or an exemption from the registration requirements of such securities laws.

4.08 Brokers . Except as set forth on Schedule 4.08 , no Person has any claim against Purchaser for a finder’s fee, brokerage commission or similar payment directly or indirectly in connection with the transactions contemplated by this Agreement.

4.09 Governmental Approvals . No Governmental Approval on the part of Purchaser is required in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby except for (a) required filings under the HSR Act, (b) as set forth on Schedule 4.09 (“ Purchaser Approvals ”), including from the LPSC and CFIUS, (c) Consents that have already been obtained, and (d) Consents not required to be made or given until after Closing.

4.10 Compliance with Laws . Purchaser is not in material violation of any Law except where any such material violation would not in the aggregate reasonably be expected to have a Material Adverse Effect.

4.11 FPA/PUHCA . Purchaser is not a holding company under PUHCA.

4.12 Due Diligence.

(a) Seller and the Company Entities have provided Purchaser with such access to the facilities, books, records and personnel of the Company Entities as Purchaser has deemed necessary and appropriate in order for Purchaser to investigate to its satisfaction the

Business and properties of the Company Entities sufficiently to make an informed investment decision to purchase the Acquired Interests and to enter into this Agreement. Purchaser (either alone or together with its Representatives) has such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its purchase of the Acquired Interests and is capable of bearing the economic risks of such purchase. Purchaser’s acceptance of the Acquired Interests on the Closing Date shall be based upon its own investigation, examination and determination with respect thereto as to all matters and without reliance upon any express or implied representations or warranties of any nature made by or on behalf of or imputed to Seller, except as expressly set forth in this Agreement. Notwithstanding the foregoing, nothing in this Section 4.12 shall in any way diminish the liability of Seller with respect to a breach of a representation or warranty expressly set forth in this Agreement.

(b) Purchaser has relied solely on its own Representatives for its evaluation of its investment decision to purchase the Acquired Interests and to enter into this Agreement and not on the advice of Seller or its Representatives. Purchaser acknowledges that any financial projections that may have been provided to it are based on assumptions of future operating results based on assumptions about certain events (many of which are beyond the control of Seller). It understands that no assurances or representations can be given that the actual results of the operations of any Company Entity will conform to the projected results for any period. Except with respect to any representation or warranty expressly set forth in this Agreement, Purchaser specifically acknowledges that no representation or warranty has been made, and that Purchaser has not relied on any representation or warranty, as to the accuracy of any projections, estimates or budgets, future revenues, future results from operations, future cash flows, the future condition of any Project or any assets of any Company Entity, the future financial condition of such Company Entity, or any other information or documents made available to Purchaser, its Affiliates or its or their respective Representatives.

4.13 Financial Capacity . Purchaser has sufficient cash or other sources of available funds to, as of the Closing, immediately pay in cash the Purchase Price in accordance with the terms of ARTICLE 2 and for all other actions necessary for Purchaser to consummate the transactions contemplated in this Agreement and perform its obligations hereunder. Purchaser acknowledges that receipt or availability of funds or financing by Purchaser or any of its Affiliates shall not be a condition to Purchaser’s obligations hereunder. Purchaser represents and warrants that all funds paid to Seller shall not have been derived from, or constitute, either directly or indirectly, the proceeds of any criminal activity under the anti-money laundering laws of the United States.

4.14 Trust Account . Purchaser acknowledges and agrees that Seller shall retain all right, title and interest in and to the Entergy Litigation Client Trust Account, including the proceeds held therein, and that such account is not intended to be included in the transaction contemplated herein.

ARTICLE 5

COVENANTS OF SELLER

Seller and the Company each covenants and agrees with Purchaser that Seller and the Company each will comply with all covenants and provisions of this Article 5 , except to the extent Purchaser may otherwise consent in writing.

5.01 Regulatory and Other Permits.

(a) Seller shall, and shall cause its Affiliates including, as applicable, any Company Entity to, prepare, as soon as is practicable following the date of this Agreement, all necessary filings in connection with the transactions contemplated by this Agreement that may be required under the HSR Act or any other federal, state or local laws prior to the Closing Date (except pursuant to section 203 of the FPA, which is subject to Section 5.01(b) below) and shall use commercially reasonable efforts to obtain as promptly as reasonably practicable all Permits and all consents, approvals or actions of all Governmental Authorities and other Persons necessary to consummate the transactions contemplated hereby, including the Seller Approvals and Seller Consents. Seller shall, and shall cause its Affiliates including, as applicable, any Company Entity to, submit the required filings as soon as reasonably practicable. Seller shall, and shall cause its Affiliates to, as soon as is practicable following the date of this Agreement, assist Purchaser in the preparation and filing of a joint voluntary notice to CFIUS pursuant to 31 C.F.R. Part 800 with regard to the transactions contemplated by this Agreement. Seller shall, and shall cause its Affiliates to, request expedited treatment of any such filings, promptly make any appropriate or necessary subsequent or supplemental filings, and cooperate with Purchaser in the preparation of such filings in such manner as is reasonably necessary and appropriate. Seller shall consult with Purchaser and shall agree in good faith with Purchaser upon the timing of such filings.

(b) Seller shall take all commercially reasonable steps to cooperate with Purchaser to obtain Consent from FERC pursuant to section 203 of the FPA in order to consummate the transactions contemplated hereby. Seller and its Affiliates shall reasonably seek Purchaser’s cooperation as necessary in such efforts, including in respect of any required execution of, or consenting to, FPA section 203-related applications or submissions with FERC, including any inquiries from staff, which applications or submissions shall be made as soon as reasonably practicable after the date of this Agreement.

(c) Subject to applicable confidentiality restrictions or restrictions required by law, Seller will notify Purchaser promptly upon the receipt by Seller or its Affiliates of (i) any comments or questions from any officials of any Governmental Authority in connection with any filings made pursuant to this Section 5.01 or the transactions contemplated by this Agreement and (ii) any request by any officials of any Governmental Authority for amendments or supplements to any filings made pursuant to any laws of any Governmental Authority or answers to any questions, or the production of any documents, relating to an investigation of the transactions contemplated by this Agreement by any Governmental Authority. Whenever any event occurs that is required to be set forth in an amendment or supplement to any filing made pursuant to this Section 5.01 , Seller shall promptly inform Purchaser of such occurrence and cooperate in filing promptly with the applicable

Governmental Authority such amendment or supplement. Without limiting the generality of the foregoing, Seller shall provide Purchaser (or its advisors), upon request, copies of all correspondence between Seller or any of its Affiliates (including any Company Entity) and any Governmental Authority relating to the transactions contemplated by this Agreement. Such materials and the information contained therein shall be given only to outside counsel of the recipient and shall not be disclosed by such outside counsel to employees, officers, or directors of the recipient without the advance written consent of Seller. In addition, to the extent reasonably practicable, all discussions, telephone calls, and meetings with a Governmental Authority regarding the transactions contemplated by this Agreement shall include representatives of both Seller and Purchaser. Subject to applicable Law, Seller shall consult and cooperate with Purchaser in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, and proposals made or submitted to any Governmental Authority regarding the transactions contemplated by this Agreement by or on behalf of Seller or Purchaser.

5.02 Access to Information; Confidentiality .

(a) Prior to the Closing Date, or, if earlier, the date this Agreement is terminated pursuant to Section 12.01 , Purchaser may make or cause to be made such review of the Business and of its respective financial and legal condition as Purchaser deems reasonably necessary or advisable. Seller shall, and shall cause the Company Entities to, permit Purchaser and its authorized agents or Representatives, including its independent accountants, to have reasonable access to the properties, books and records of the Company Entities during normal business hours to review information and documentation relative to the properties, books, contracts, commitments and other records of the Company Entities; provided, that such investigation shall only be upon reasonable notice and shall not disrupt personnel and operations of the Business and shall be at Purchaser’ sole cost and expense; provided, further, that none of Purchaser, its Affiliates or their respective Representatives, shall conduct any environmental site assessment, compliance evaluation or investigation with respect to any Project or Company Entity without the prior written consent of Seller (it being understood and agreed that Seller may have no such authority, whether contractual or otherwise, to consent to such undertakings with respect to any Project) and without ongoing consultation with Seller with respect to any such activity (it being understood and agreed that in no event shall any subsurface investigation or testing of any environmental media be conducted); provided, further, that, for the avoidance of doubt, none of Purchaser, its Affiliates or their respective Representatives shall have any right to access or review any Tax Return of Seller or any of its Affiliates (including any consolidated, combined or unitary Tax Return including any such entity), except for separate Tax Returns of the Company Entities. Notwithstanding the foregoing, Seller and its Affiliates will use commercially reasonable efforts to provide Purchaser with information contained in such returns, or derived from those returns without undue burden, that is reasonably requested by Purchaser and relevant to its tax due diligence. All requests for access to the offices, properties, books and records of the Company Entities shall be made to such Representatives of Seller as Seller shall designate, who shall be solely responsible for coordinating all such requests and all access permitted hereunder. It is further agreed that none of Purchaser, its Affiliates or their respective Representatives shall, prior to the Closing Date, contact any of the employees, customers, suppliers, parties that have business relationships with the Company Entities in

connection with the transactions contemplated hereby, whether in person or by telephone, mail or other means of communication, without the specific prior authorization of Seller or its Representatives, except as provided on Schedule 5.02 with respect to communications with the co-op customers, nor contact any Governmental Authority or Representatives thereof, in each case except as provided in Article 6 (other than the required filings specified in Section 3.05 ). Any access to the offices, properties, books and records of the Company Entities shall be subject to the following additional limitations: (i) Purchaser, its Affiliates, and their respective Representatives, as applicable, shall give Seller notice of at least two (2) Business Days prior to conducting any inspections of the Company Entities, and a Representative of Seller shall have the right to be present when Purchaser, its Affiliates or their respective Representatives conducts its or their investigations on such property; (ii) none of Purchaser, its Affiliates or their respective Representatives shall damage the property of the Company Entities or any portion thereof; and (iii) Purchaser, its Affiliates, and their respective Representatives, as applicable, shall (A) use reasonable best efforts to perform all on-site reviews and all communications with any Person in an expeditious and efficient manner; and (B) indemnify, defend and hold harmless Seller, the members of the Company Entities, their respective Affiliates, and each of their respective employees, directors and officers from and against all damages resulting from or relating to the activities of Purchaser, its Affiliates and their respective Representatives under this paragraph. The foregoing indemnification obligation shall survive the Closing or termination of this Agreement. Notwithstanding anything herein to the contrary, prior to the Closing Date, Seller shall not be required to provide any access or information to Purchaser, its Affiliates or any of their respective Representatives which Seller reasonably believes it or the Company Entities are prohibited from providing to Purchaser, its Affiliates or their respective Representatives by reason of applicable Law, which constitutes or allows access to information protected by attorney-client privilege, or which Seller or the Company Entities are required to keep confidential or prevent access to by reason of any Contract with a third party or which would otherwise expose any Seller or any of its Affiliates to a material risk of Liability. For purposes of this Section 5.02(a) , Purchaser’s Representatives shall include the Financing Sources.

(b) Purchaser, its Affiliates and their respective Representatives shall hold in confidence all confidential information obtained from Seller, the Company Entities or their respective Affiliates, officers, agents, Representatives or employees, whether or not relating to the Business, in accordance with the provisions of the Confidentiality Agreement which, notwithstanding anything contained therein, shall remain in full force and effect following the execution of this Agreement and shall survive any termination of this Agreement in accordance with its terms. After the Closing Date, Seller, its Affiliates and their respective Representatives shall hold in confidence all information provided to Purchaser, its Affiliates or their respective officers, agents, Representatives or employees, relating to the Business, in accordance with the provisions of the Confidentiality Agreement to the same extent that would be required if Seller were a “Receiving Party” pursuant to the Confidentiality Agreement. Notwithstanding anything contained in this Agreement or the Confidentiality Agreement, the obligations of Seller set forth in the immediately preceding sentence shall remain in full force and effect following the execution of this Agreement and shall survive any termination of this Agreement in accordance with its terms

5.03 Exhibits and Schedules; Notification of Certain Matters .

(a) All exhibits and schedules and the Disclosure Schedules attached hereto are hereby incorporated herein by reference and made a part hereof.

(b) Neither the specification of any dollar amount in any representation nor the mere inclusion of any item in a schedule or in the Disclosure Schedules as an exception to a representation or warranty shall be deemed an admission by a Party that such item represents a material fact, event or circumstance or that such item is reasonably likely to result in a Material Adverse Effect on the Company Entities or Purchaser.

(c) Seller shall have the right (but not the obligation) to deliver to Purchaser, at least five (5) Business Days prior to the Closing Date, a supplement to the Seller Disclosure Schedule (the “ Closing Date Schedule Supplement ”) to disclose any matter arising or discovered after the date hereof, that, if existing at, or arising or discovered prior to the date hereof, would have been required to be set forth in the Seller Disclosure Schedule for the representations and warranties of Seller set forth herein to be true and correct as of the date hereof, and the Seller Disclosure Schedule shall be deemed to be modified, supplemented and amended to include the items listed in the Closing Date Schedule Supplement for all purposes hereunder, other than to cure any breach or inaccuracy of any representation or warranty of Seller contained in this Agreement for purposes of ARTICLE 11 . If any item set forth in the Closing Date Schedule Supplement discloses any event, circumstance or development that, individually or in the aggregate when taken together with other previously disclosed events, circumstances or developments, would prevent any of the conditions set forth in Section 7.01 to be satisfied, then Purchaser may terminate this Agreement by delivering notice of termination to Seller within twenty (20) Business Days of its receipt of such Closing Date Schedule Supplement; provided, that if Purchaser does not deliver such notice within such twenty (20) Business Day period, then Purchaser shall be deemed to have irrevocably waived their right to terminate this Agreement with respect to such item and their right to not consummate the transactions contemplated hereby with respect to such item, in each case, after giving effect to such item under any of the conditions set forth in Section 7.01 , but shall not be deemed to have irrevocably waived their right to indemnification under Section 11.01 with respect to such item.

5.04 Conduct of Business .

(a) Seller covenants and agrees that, except (i) as otherwise expressly contemplated by this Agreement (including as described on Schedule 5.04(b) and the other matters contemplated by the other Schedules and Exhibits hereto), (ii) for the effect of the announcement and consummation of the transactions contemplated hereby, or (iii) as otherwise approved in writing by Purchaser (which approval shall not be unreasonably withheld, conditioned or delayed), during the Interim Period, Seller shall cause the Company Entities to be operated in the ordinary course of business consistent with Laws and Permits, past practice, and shall use commercially reasonable efforts to preserve, maintain and protect the assets and properties of the Company Entities and the Business; provided, that such efforts shall not include any requirement or obligation to make any payment or assume any Liability not otherwise required to be paid or assumed by the terms of an existing Contract or

offer or grant any financial accommodation or other benefit not otherwise required to be made by the terms of an existing Contract.

(b) Without limiting Section 5.04(a) , except as (A) set forth on Schedule 5.04(b) , (B) otherwise contemplated by this Agreement, (C) required by applicable Law, or (D) with the express written approval of Purchaser (which approval shall not be unreasonably withheld, conditioned or delayed), during the Interim Period, Seller shall cause the Company and each Subsidiary not to, and the Company shall not and shall cause each other Company Entity not to:

(i) transfer any of the Acquired Interests to any Person or create or suffer to exist any Lien upon the Acquired Interests;

(ii) issue, grant, deliver or sell or authorize or propose to issue, grant, deliver or sell, or purchase or propose to purchase, any of its equity securities (other than the sale and delivery of the Acquired Interests pursuant to this Agreement), Options, warrants, calls, rights, exchangeable or convertible securities, commitments or agreements of any character, written or oral, obligating it to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any of its equity securities;

(iii) declare, set aside, make or pay any dividend or other distribution, in respect of the Acquired Interests to Seller;

(iv) except as required by GAAP, change any accounting methods, principles or practices, or make any material change in any Company Entity’s cash management practices or accounts receivables or accounts payable policies, practices and procedures;

(v) make or change any Tax election (to be effective before or after the Closing Date), change an annual accounting period, adopt or change any accounting method with respect to Taxes, file any amended Tax Return with respect to any material Taxes, file any Tax Return that is prepared on a basis that is materially inconsistent with the elections, accounting methods, conventions and principles of taxation used for the most recent taxable periods for which comparable Tax Returns involving similar Tax items have been filed, enter into any closing agreement, settle or compromise any proceeding with respect to any material Tax claim or assessment, surrender any right to claim a refund of material Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to the Company or any Subsidiary, or take any other similar action relating to the filing of any Tax Return or the payment of any material Tax;

(vi) take any action or enter into any commitment with respect to or in contemplation of any liquidation, dissolution, recapitalization, reorganization, or other winding up of business or operations of any Company Entity;

(vii) make any material change in its business or operations, except such changes as may be required to comply with any applicable Law, including any material change to the levels of Inventory maintained at any Project;

(viii) make any material capital expenditures (or enter into any Contracts

in respect of material capital expenditures) other than capital expenditures paid to third parties other than Seller and its Affiliates to the extent contemplated by the monthly budgets set forth on Schedule 5.04(b)(viii) ;

(ix) form a subsidiary, or merge any Company Entity into or with any other Person or consolidate any Company Entity with any other Person;

(x) sell, lease, transfer or otherwise dispose of any assets pertaining to the Business with a value in excess of $250,000 to any Person (other than to any Company Entity) or encumber any such assets other than Permitted Liens;

(xi) permit any Company Entity to (x) create, incur or assume any long-term debt, (y) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for any material obligations of any Person (other than any Company Entity) or (z) make any loans, advances or capital contributions to or investments in any Person (other than any Company Entity), other than obligations that will be discharged on or prior to Closing;

(xii) enter into, amend, modify, grant a waiver in respect of, cancel or consent to the termination of any Company Contract other than any amendment, modification or waiver which is not material to such Company Contract and is otherwise in the ordinary course of business;

(xiii) acquire, or enter into any Contract for any acquisitions (by merger, consolidation, or acquisition of stock or assets or any other business combination), of any Person or business or any division thereof;

(xiv) enter into or adversely amend, modify or waive any rights under, in each case, any Contract (or series of related Contracts) with Seller or any Affiliate of Seller, other than the entry into or amendment, modification, or waiver of any such Contracts on an arms’ length basis which are not in the aggregate materially adverse to the Business;

(xv) except as required by the terms of any Collective Bargaining Agreement, enter into, amend or extend any Collective Bargaining Agreement with a labor union, works council or other employee representative body;

(xvi) except as required by the terms of any Collective Bargaining Agreement, enter into any offers of employment, employment, change in control, severance, retention or consulting agreements, arrangements or programs or materially amend the terms and conditions of employment for any Business Employee, other than the hiring of employees for the positions described on Schedule 5.04(b)(xvi) ;

(xvii) except as required by the terms of any Collective Bargaining Agreement, establish any new Company Employee Plan for the benefit of any Business Employee, amend, modify or terminate the material terms and conditions of any Company Employee Plan in respect of any Business Employee or otherwise increase the annual base salary, hourly rate, other compensation or benefits of any Business Employee;

(xviii) pay, discharge, settle or satisfy any claims, liabilities or obligations prior to the same being due in excess of $250,000 in the aggregate;

(xix) amend the Constitutive Documents;

(xx) fail to maintain insurance coverage substantially equivalent to its insurance coverage as in effect on the date hereof;

(xxi) settle, resolve or compromise any material environmental claim with any Governmental Authority relating to any actual or alleged violations of applicable Environmental Law or Orders;

(xxii) materially modify any Permits issued pursuant to Environmental Laws;

(xxiii) permit to occur any Leakage; or

(xxiv) agree to enter into any Contract or otherwise make any commitment to do any of the foregoing in this Section 5.04 .

(c) Notwithstanding the foregoing or anything in this Agreement to the contrary, Seller and the Company Entities may take (or not take, as the case may be) any of the actions described in Section 5.04(b) above in connection with Permitted Intercompany Transfers. At Closing, Seller shall, and shall cause its Affiliates including any Company Entity to, terminate, at no penalty or other cost to any Company Entity, any Affiliate Contract identified by Purchaser on or prior to the Closing Date.

(d) During the Lockbox Period, Seller shall ensure that all accrued revenues and accrued costs relating to each Company Entity shall only be allocated to the Company Entity that generated or incurred such revenues and expenses and not to any other Company Entity.

(e) Within fifteen (15) Business Days after the end of each calendar month during the Interim Period, Seller shall provide Purchaser with reports (the “ Interim Reports ”) detailing (i) all transactions between or among any Company Entity, on the one hand, and Seller and its Affiliates (other than a Company Entity), on the other hand, including all Permitted Intercompany Transfers, (ii) the income statements for each Company Entity, and (iii) the balance sheet for each Company Entity, in each case in respect of such calendar month. Within ten (10) Business Days after the Closing Date, Seller shall provide Purchaser with Interim Reports in respect of the period beginning on the day after the last calendar month in respect of which a report was delivered pursuant to the preceding sentence and ending on the Closing Date. During the Interim Period and post-Closing, Seller shall provide Purchaser and its Representatives reasonable access to such books, records, documents, work papers and employees (including those of the Company Entities) as are reasonably requested in connection with its review and verification of the Interim Reports.

(f) During the Interim Period, Seller shall, and shall cause Cottonwood and those entities set forth in Schedule 1.01(a) to, comply with all covenants of “Tenant” under

the Cottonwood Lease as if it were in effect during the Interim Period, including the operation and maintenance standards set forth in Exhibit F to the Cottonwood Lease.

(g) During the Interim Period, Seller shall, and shall cause its Affiliates to, (i) use commercially reasonable efforts to maintain employment relationships with their employees (other than Business Employees, whose treatment during the Interim Period is governed by Sections 5.04(a) and 5.04(b) ) who provide trading or other commercial services to the Company Entities, (ii) use reasonable efforts to ensure that such persons, while they remain employees, continue to devote the majority of their working time to the provision of such services; (iii) use reasonable efforts to replace any such employees whose employment with Seller and its Affiliates terminates, or who otherwise cease to spend the majority of their working time to the provision of such services, as soon as practicable following any such termination or cessation with other employees with similar experience providing such services in any wholesale power market in the United States; and (iv) not materially alter the methodology for compensating any such employees (including incentive compensation relating to their services for or on behalf of the Company Entities).

5.05 Insurance .

(a) From and after the Closing Date, except as provided in Section 5.05(b) , (x) the Company Entities shall cease to be insured by, have access or availability to, be entitled to make claims on, be entitled to claim benefits or seek coverage under, any of Seller’s or its Affiliates’ insurance policies or any of their self-insured programs for any event or occurrence after the Closing; and (y) Purchaser shall be solely responsible for obtaining or providing insurance coverage for the Company Entities for any event or occurrence after the Closing sufficient to comply with any and all of the contractual and statutory obligations of the Company Entities.

(b) Seller shall transfer, or cause to be transferred, to Purchaser at the Closing the Company Entities’ excess liability retroactive dates. Furthermore, Purchaser shall be entitled to make claims on and seek coverage under Seller’s or its Affiliates’ insurance policies, and negotiate and control the resolution and settlement with those insurers, for claims which arise relating to incidents that occurred before the Closing Date. This right is limited to recourse to such insurance policies to the extent such claims are covered by such insurance policies, and not recourse to any self-insured program of Seller or its Affiliates. Seller shall use commercially reasonable efforts to execute and deliver, or cause to be executed or delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions as may be necessary to assist Purchaser with the foregoing.

5.06 Risk of Loss; Casualty . Except as otherwise provided in this Section ý5.06 , during the Interim Period, all risk of loss or damage to the property or assets of the ProjectCos including the Projects, shall, as between Purchaser and Seller, be borne by Seller unless such loss is caused or created by Purchaser. If during the Interim Period, the property or assets of the ProjectCos, including the Projects, are damaged by fire or other casualty (each such event, an “ Event of Loss ”), or are taken by a Governmental Authority by exercise of the power of eminent domain (each, a “ Taking ”), then the following provisions of this Section 5.06 shall apply:

(a) Following the occurrence of (i) any one or more Events of Loss, if the aggregate costs to restore, repair or replace the property or assets of the ProjectCos subject to such Event of Loss to a condition reasonably comparable to its or their condition prior to such Event of Loss, plus the amount of any lost profits reasonably expected to accrue after Closing as a direct result of such Event of Loss (such amount pursuant to this clause (i) to be determined by an independent third party appraiser mutually selected by the Parties (collectively, “ Restoration Costs ”)) and/or (ii) any one or more Takings, if the value of the property subject to such Taking plus the amount of any lost profits reasonably expected to accrue after Closing as a direct result of such Taking, less any condemnation award received by Purchaser (provided, that any such condemnation award is made available to Purchaser) (such amount pursuant to this clause (ii) to be determined by an independent third party appraiser mutually selected by the Parties (collectively, the “ Condemnation Value ”)), is, in the aggregate, less than or equal to one percent (1%) of the Base Purchase Price, in the case of each of clauses (i) and (ii), net of and after giving effect to (A) any insurance, condemnation award or other third party proceeds reasonably expected to be available to the applicable ProjectCos of Seller for such event, (B) any tax benefits related thereto, and (C) any amounts expended by the applicable Project Company or Seller prior to Closing to restore damage caused by such casualty event there shall be no effect on the transactions contemplated hereby.

(b) Subject to the termination right of Purchaser and Seller set forth in Section 5.06(d) , upon the occurrence of any one or more Events of Loss and/or Takings involving aggregate Restoration Costs and Condemnation Value in excess of one percent (1%) of the Base Purchase Price (a “ Major Loss ”), Seller shall have, in the case of a Major Loss relating solely to one or more Events of Loss, the option, exercised by notice to Purchaser, to restore, repair or replace the damaged assets or properties prior to Closing to a condition comparable in all material respects to their condition prior to such Event of Loss or Taking, as the case may be. If Seller elects to so restore, repair or replace the assets or properties relating to a Major Loss, which election shall be made by notice to Purchaser prior to the Closing Date and as soon as practicable following the occurrence of the Major Loss, Seller will complete or cause to be completed the repair, replacement or restoration of the damaged assets or property prior to the Closing and the Closing Date shall be postponed for the amount of time reasonably necessary to complete the restoration, repair or replacement of such property or assets as reasonably agreed between Purchaser and Seller (including, if necessary, the extension of the date contemplated by Section 12.01(b) (but for no more than thirty (30) days) to allow for the restoration, repair or replacement of such assets or properties). Seller shall use its commercially reasonable efforts to keep Purchaser reasonably informed with respect to such restoration, repair or replacement, including, subject to its reasonable discretion, allowing Purchaser to participate in meetings, communications and inspections pertaining thereto, in order to enable Purchaser to evaluate the quality and sufficiency thereof. If the Restoration Costs exceed $2,000,000 in the aggregate, Seller will not grant its final acceptance of any such restoration, repair or replacement without Purchaser’s prior written consent, which shall not be unreasonably withheld, delayed or conditioned. If Seller elects not to cause the restoration, repair or replacement of the property or assets affected by a Major Loss, or such Major Loss is the result in whole or in part of one or more Takings or is otherwise not capable of being restored, repaired or replaced, the provisions of Section 5.06(c) will apply.

(c) Subject to the termination right of Purchaser and Seller set forth in Section 5.06(d) , in the event that Seller elects not to cause the restoration, repair or replacement of a Major Loss, or in the event that Seller, having elected to cause repair, replacement or restoration of the Major Loss, fails to cause its completion within the period of time agreed upon by the Parties pursuant to Section 5.06(b) (subject to extension for up to ninety (90) days for causes beyond Seller’s control), or in the event that a Major Loss is the result in whole or in part of one or more Takings or is otherwise not capable of being restored, repaired or replaced, then the Parties shall, within thirty (30) days following Seller’s election not to cause the restoration, repair or replacement, failure to complete, or the occurrence of such Major Loss, as the case may be, adjust the Purchase Price downward by the aggregate Restoration Cost and Condemnation Value, and proceed to Closing. To assist Purchaser in its evaluation of any and all Events of Loss, Seller shall provide Purchaser such access to the properties and assets and such information as Purchaser may reasonably request in connection therewith.

(d) In the event that the aggregate Restoration Costs and Condemnation Value with respect to one or more Events of Loss and/or Takings equals an amount in excess of seven and one half percent (7.5%) of the Base Purchase Price, then either Purchaser or Seller shall have the right to terminate this Agreement.

5.07 Fulfillment of Conditions . Seller (a) shall take all commercially reasonable steps necessary or desirable, and proceed diligently and in good faith to satisfy each condition to the obligations of Seller contained in this Agreement and (b) shall not, and shall not permit the Company, any Subsidiary or any of its other Affiliates to, take or fail to take any action that would reasonably be expected to result in the non-fulfillment of any such condition or materially delay or impair the approval of any Governmental Authority.

5.08 Further Assurances . During the Interim Period, and post-Closing, Seller shall use its commercially reasonable efforts to execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions as may be necessary to consummate the transactions contemplated by this Agreement, including such actions at its expense as are necessary in connection with obtaining any third-party consents and all Governmental Approvals required to be obtained by Seller. During the Interim Period, Seller shall cooperate with Purchaser and provide any information regarding Seller necessary to assist Purchaser in making any filings or applications required to be made with any Governmental Authority, including, without limitation, the transfer of environmental Permits to Purchaser, as applicable. Notwithstanding anything to the contrary contained in this Section 5.08 , if the Parties are in an adversarial relationship in litigation or arbitration, the furnishing of any documents or information in accordance herewith shall be solely subject to applicable rules relating to discovery and the remainder of this Section 5.08 shall not apply.

5.09 Post-Closing Access; Preservation of Records . From and after the Closing, Seller shall make or cause to be made available to Purchaser and its Representatives all books, records and documents of Seller relating to the Business (and the assistance of employees responsible for such books, records and documents) during regular business hours for the same purposes, to the extent applicable, as set forth in Section 6.06 ; provided, however, that access to such books, records, documents and employees shall not interfere with the normal operations of Seller and

the reasonable out-of-pocket expenses of Seller incurred in connection therewith shall be paid by Purchaser; provided, further, that none of Purchaser, its Affiliates or their Representatives shall have any right to access or review any Tax Return of Seller or any of its Affiliates (including any consolidated, combined or unitary Tax Return including any such entity); provided, for the avoidance of doubt, that the foregoing limitation shall not limit Purchaser’s right to receive information from Seller, including Tax Returns filed by Seller (but not any Tax Return of Seller or any of its Affiliates (other than Seller)) to the extent that such information or Tax Return is reasonably necessary for (i) investigating, settling, preparing for the defense or prosecution of, defending or prosecuting any Action or Proceeding, (ii) preparing reports to stockholders and Government Authorities or (iii) such other purposes for which access to such documents is determined by Purchaser to be reasonably necessary, including preparing and delivering any accounting or other statement provided for under this Agreement or otherwise, preparing Tax Returns, pursuing Tax refunds or responding to or disputing any Tax audit, or the determination of any matter relating to the rights and obligations of Seller or Purchaser or any of their Affiliates under this Agreement. Seller shall maintain and preserve all such Tax Returns, books, records and other documents for any applicable statutory or regulatory retention period, as the same may be extended and, in each case, shall offer to transfer such records to Purchaser at the end of any such period. Notwithstanding anything herein to the contrary, Seller shall not be required to provide any access or information to Purchaser, its Affiliates or any of their respective Representatives which Seller reasonably believes it is prohibited from providing to Purchaser, its Affiliates or their respective Representatives by reason of applicable Law, which constitutes or allows access to information protected by attorney-client privilege, or which Seller is required to keep confidential or prevent access to by reason of any Contract with a third party or which would otherwise expose Seller or any of its Affiliates to a material risk of Liability. For purposes of this Section 5.09 , Purchaser’s Representatives shall include the Financing Sources.

5.10 Data Room . Within ten (10) Business Days after the Closing, Seller shall deliver to Purchaser on CD ROM or flash drive an electronic copy of the documents and information contained in the virtual data room. Seller shall maintain the virtual data room and provide Purchaser access thereto until such delivery has been made.

5.11 No Solicitation . Seller shall not, and shall not authorize or permit the Company, any Subsidiary, any of its other Affiliates or any of its or their respective Representatives to, directly or indirectly, (i) encourage, solicit, initiate, facilitate or continue inquiries regarding an Acquisition Proposal; (ii) enter into discussions or negotiations with, or provide any information to, any Person concerning a possible Acquisition Proposal or (iii) enter into any agreements or other instruments (whether or not binding) regarding an Acquisition Proposal. Seller shall immediately cease and cause to be terminated, and shall cause the Company, any Subsidiary, any of its other Affiliates, and all of its and their Representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to, or that could lead to, an Acquisition Proposal. For purposes hereof, “ Acquisition Proposal ” shall mean any inquiry, proposal or offer from any Person concerning (a) a merger, consolidation, liquidation, recapitalization, share exchange or other business combination transaction involving the Company or any Subsidiary; (b) the issuance or acquisition of equity securities of the Company or any Subsidiary; or (c) the sale, lease, exchange or other disposition of any significant portion of the Company’s or any Subsidiary’s properties or assets.

5.12 Oxbow Property . During the Interim Period, but in any event at least five (5) Business Days prior to the Closing, Seller shall cause New Roads to distribute up, transfer or otherwise assign to the Company and the Company to distribute up, transfer or otherwise assign to Seller or an Affiliate of Seller (other than a Company Entity) the Oxbow Property (the result of such distributions, transfers or assignments, the “ Oxbow Property Transfer ”) pursuant to documentation in form and substance reasonably satisfactory to Purchaser.

5.13 Audited Financials . As soon as practicable after the date hereof, the Seller shall prepare, and shall engage KPMG to conduct an SAS 100 review of combined financial statements for the Business as of and for the year ended December 31, 2017, including balance sheets and the related statements of income, comprehensive income, changes in stockholders’ equity and cash flows, which financial statements shall be delivered to Purchaser on or before April 30, 2018. Up to $100,000 of the out-of-pocket costs of preparation of such financial statements may be paid for the Company Entities and any such payments (not to exceed $100,000) shall not constitute Leakage.

5.14 Financing Cooperation . During the Interim Period, Seller shall use, and shall cause the Company Entities and its and their respective Representatives (including, as applicable, legal, tax, regulatory and accounting) to use, commercially reasonable efforts to cooperate as reasonably requested by Purchaser in connection with the arrangement of the Debt Financing (provided that such requested cooperation does not unreasonably interfere with the ongoing operations of the Company Entities). Purchaser shall reimburse Seller for any reasonable and documented, out-of-pocket third party expenses actually incurred by it in connection with fulfilling its obligations under this Section 5.14 . In no event shall Purchaser or any of its Affiliates have any obligation to bring any Action or Proceeding against any Financing Source with respect to the Debt Financing or the consummation of the transactions contemplated hereby or thereby, and Seller hereby agrees that it shall not undertake any action (and shall not cause or permit any of its Affiliates to undertake any action) that seeks to cause Buyer to bring any such Action or Proceeding against any Financing Source.

5.15 Equity Settlement of Certain Accounts . No later than February 28, 2018, Seller will Equity Settle or cause to be Equity Settled to zero dollars ($0), as of December 31, 2017, the account balances for Accounts Payable (Affiliate) and Accounts Receivable (Affiliate).

5.16 PJM Capacity Revenue . For the period beginning on the later of June 1, 2018, and the Closing Date and ending on May 31, 2019, Seller shall pass through to Purchaser any PJM 2018/2019 Capacity Revenue received by Seller within five (5) Business Days of receipt thereof from PJM. Any payment under this Section 5.16 shall be made by wire transfer of immediately available funds to such account as the Purchaser shall designate in writing to Seller. For the avoidance of doubt, any PJM 2018/2019 Capacity Revenue or other PJM net capacity revenue for prior delivery years related to the BC II Unit I Project and BC II Unit II Project that is received during the Lockbox Period shall be paid to the applicable Company Entity and be subject to the restrictions on Leakage set forth in Section 5.04.

5.17 Replacement Agreements . Seller shall use commercially reasonable efforts to assist Purchaser (or any Person designated by Purchaser) to enter into agreements with Waste Management National Services, Inc. and Solvay Chemicals, Inc. for the services and products set

described in the Waste Management Agreement (as defined on Schedule 3.12(a) ) and the Solvay Chemicals Agreement (as defined in Schedule 3.12(a) ), in each case on terms and conditions satisfactory to Purchaser.

ARTICLE 6

COVENANTS OF PURCHASER

Purchaser covenants and agrees with Seller that Purchaser will comply with all covenants and provisions of this Article 6 made by Purchaser, except to the extent Seller may otherwise consent in writing.

6.01 Regulatory and Other Permits .

(a) Except pursuant to section 203 of the FPA, which is subject to Section 6.01(e) , and with respect to the LPSC, which is subject to Section 6.01(f) , Purchaser shall, and shall cause Purchaser Parent to, prepare, as soon as is practicable following the date of this Agreement, all necessary filings in connection with the transactions contemplated by this Agreement that may be required under the HSR Act or any other federal, state or local laws prior to the Closing Date and shall use commercially reasonable efforts to obtain as promptly as reasonably practicable all Permits and all consents, approvals or actions of all Governmental Authorities and other Persons necessary to consummate the transactions contemplated hereby, including the Purchaser Approvals and Purchaser Consents. Purchaser shall, and shall cause Purchaser Parent to, submit the required filings as soon as reasonably practicable. Purchaser shall, as soon as is practicable following the date of this Agreement, prepare and file a joint voluntary notice with Seller to CFIUS pursuant to 31 C.F.R. Part 800 with regard to the transactions contemplated by this Agreement. Purchaser shall, and shall cause Purchaser Parent to, request expedited treatment of any such filings, promptly make any appropriate or necessary subsequent or supplemental filings, and cooperate with Seller in the preparation of such filings in such manner as is reasonably necessary and appropriate. Purchaser shall consult with Seller and shall agree in good faith with Seller upon the timing of such filings.

(b) Purchaser shall not, and shall cause Purchaser Parent not to, take any action that could reasonably be expected to adversely affect or materially delay or impair the approval of any Governmental Authority of any of the aforementioned filings.

(c) Subject to applicable confidentiality restrictions or restrictions required by law, Purchaser will notify Seller promptly upon the receipt by Purchaser or Purchaser Parent of (i) any substantive written comments or questions from any officials of any Governmental Authority in connection with any filings made pursuant to Section 5.01 or this Section 6.01 or the transactions contemplated by this Agreement and (ii) any request by any officials of any Governmental Authority for amendments or supplements to any filings made pursuant to any laws of any Governmental Authority or answers to any questions, or the production of any documents, relating to an investigation of the transactions contemplated by this Agreement by any Governmental Authority. Whenever any event occurs that is required to be set forth in an amendment or supplement to any filing made pursuant to Section 5.01 or this Section 6.01 , Purchaser shall promptly inform Seller of such occurrence and cooperate in

filing promptly with the applicable Governmental Authority such amendment or supplement. Without limiting the generality of the foregoing, Purchaser shall provide Seller (or its advisors), upon request, copies of all substantive correspondence between Purchaser and any Governmental Authority relating to the transactions contemplated by this Agreement. Such materials and the information contained therein shall be given only to outside counsel of the recipient and shall not be disclosed by such outside counsel to employees, officers, or directors of the recipient without the advance written consent of Purchaser. In addition, to the extent reasonably practicable, Purchaser will provide Seller with reasonable prior notice of all scheduled discussions, telephone calls, and meetings with a Governmental Authority regarding the transactions contemplated by this Agreement and such meetings shall include representatives of Seller and Purchaser. Subject to applicable Law, Purchaser shall consult and cooperate with Seller in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, and proposals made or submitted to any Governmental Authority regarding the transactions contemplated by this Agreement by or on behalf of Seller or Purchaser.

(d) Purchaser shall, and shall cause Purchaser Parent to, promptly take, in order to consummate the transactions contemplated by this Agreement, all commercially reasonable actions to (i) secure the expiration or termination of any applicable waiting period from a Governmental Authority and (ii) resolve any objections asserted with respect to the transactions contemplated by this Agreement raised by any Governmental Authority, and to prevent the entry of any court order and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order that would prevent, prohibit, restrict, or delay the consummation of the transactions contemplated by this Agreement, subject to Section 13.17 ; provided , however, that absent Purchaser’s prior written consent (which may be withheld in Purchaser’s sole discretion) in no event shall Purchaser or Purchaser Parent be required to (A) execute settlements, undertakings, consent decrees, stipulations, or other agreements with any Governmental Authority, (B) sell, divest, or otherwise convey particular assets or categories of assets or businesses of Purchaser or the Company Entities, (C) agree to sell, divest or otherwise convey any particular assets or categories of assets or businesses of Purchaser or the Company Entities contemporaneously with or subsequent to the Closing, or (D) permit Seller to sell, divest, or otherwise convey any particular assets or categories of assets or businesses of the Company Entities prior to the Closing. Purchaser shall, and shall cause Purchaser Parent to, respond to and seek to resolve as promptly as reasonably practicable any objections asserted by any Governmental Authority with respect to the transactions contemplated by this Agreement.

(e) Subject to Section 6.01(d) and Section 13.17 , Purchaser and Purchaser Parent shall reasonably cooperate with Seller in its taking commercially reasonable steps to obtain Consents from FERC pursuant to section 203 of the FPA in order to consummate the transactions contemplated hereby, including the execution of, or consenting to, FPA section 203-related applications or submissions with FERC, including any inquiries from staff, which applications or submissions shall be made as soon as reasonably practicable. With respect to communications by Purchaser with FERC (including, for these purposes, its staff) relating to the FPA section 203-related applications for submissions, Purchaser shall: (i) promptly notify Seller of any written communication to Purchaser from FERC and, subject to applicable Laws and Orders, jointly consult and agree on any response thereto; (ii) not agree

to participate in an substantive meeting or discussion with FERC in respect of any filings, investigation or inquiry concerning the transaction contemplated by this Agreement unless Purchaser consults with Seller in advance and, to the extent permitted by FERC, gives the Seller the opportunity to attend and participate in such meeting or discussion; and (iii) subject to applicable Laws and Orders, furnish the Seller with copies of all materials substantive correspondence, filings, and written communications between Purchaser and FERC with respect to the transactions contemplated by this Agreement.

(f) Subject to Section 6.01(d) and Section 13.17 , with respect to communications with the LPSC (including, for these purposes, its staff), Purchaser shall provide Seller with updates (on a weekly basis, at time to be reasonably agreed upon on an ongoing basis by Seller and Purchaser) of material developments and the prosecution of the requested approvals by Purchaser Parent from the LPSC contemplated by Schedule 6.01 and Section 7.10 . To the extent that such communications extend to matters pertaining to Company Contracts with the Cooperative Customers identified in Schedule 3.12(a) with the notation “Requirements Power Supply Contract,” “Form A,” “Form B” or “Form C,” Purchaser shall give Seller the opportunity to review and comment (to the extent reasonably practicable) with respect to the following: (i) material issues and developments; (ii) all material public filings; and (iii) discovery requests; provided that, with respect to advice and comment by Seller on such written discovery requests, Purchaser shall not be required to provide Purchaser Parent’s written discovery responses to Seller as part of such advice and comment.

6.02 Fulfillment of Conditions . Purchaser (a) shall take all commercially reasonable steps necessary or desirable and proceed diligently and in good faith to satisfy each other condition to the obligations of Seller contained in this Agreement, and (b) shall not, and shall not permit any of its Affiliates to, take or fail to take any action that would reasonably be expected to result in the non-fulfillment of any such condition.

6.03 Further Assurances . During the Interim Period, Purchaser shall use commercially reasonable efforts to execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions as may be necessary to consummate the transactions contemplated by this Agreement, including such actions at its expense as are necessary in connection with obtaining any third-party consents and all Governmental Approvals required to be obtained by Purchaser. During the Interim Period, Purchaser shall cooperate with Seller and provide any information regarding Purchaser necessary to assist Seller in making any filings or applications required to be made with any Governmental Authority. Notwithstanding anything to the contrary contained in this Section 6.03 , if the Parties are in an adversarial relationship in litigation or arbitration, the furnishing of any documents or information in accordance herewith shall be solely subject to applicable rules relating to discovery and the remainder of this Section 6.03 shall not apply.

6.04 Support Obligations . Purchaser acknowledges that Seller and certain Affiliates have provided certain credit support pursuant to the support obligations and related agreements described on Schedule 3.23 (the “ Support Obligations ”). During the Interim Period, in each case, at Purchaser’s sole risk, cost and expense:

(a) Purchaser shall take all steps reasonably necessary, including offering substitute guarantees of Purchaser Parent, and Seller shall cooperate (it being understood that such cooperation shall not include any requirement to pay any consideration or offer or grant any financial accommodation) in all reasonable respects with Purchaser, to endeavor to ensure that, effective as of the Closing Date, (i) Seller and its Affiliates (other than any Company Entity) shall be released from one hundred percent (100%) of any and all obligations or Liabilities relating to or arising under or out of or in connection with each Support Obligation, and (ii) substitute arrangements, if required by a beneficiary of any Support Obligation, of Purchaser or Purchaser Parent shall be in effect, including by providing (or causing to be provided) letters of credit or similar support, and

(b) without limiting the foregoing, in the event that the requirements set forth in clause (a) of this Section 6.04 are not met as of the Closing Date, and subject to acceptance by Seller in its reasonable discretion, Purchaser or its relevant Affiliates shall, in lieu of providing substitute arrangements in respect of Support Obligations pursuant to clause (a)(ii) of this Section 6.04 , enter into such indemnification and reimbursement agreements with Seller or any of its Affiliates as reasonably necessary to provide Seller and such Affiliates with an effective release or full indemnification with respect to all obligations and Liabilities of Seller and such Affiliates to be released pursuant to in clause (b) of this Section 6.04 ; provided that, Purchaser’s indemnification obligations under clause (i) shall not affect Seller’s indemnification obligations under Section 11.01 .

6.05 Purchaser Parent Guaranty . Purchaser shall concurrently with the execution and delivery of this Agreement, cause to be executed and delivered to Seller the Purchaser Parent Guaranty.

6.06 Post-Closing Access; Preservation of Records . From and after the Closing, Purchaser and Purchaser Parent shall make or cause to be made available to Seller all books, records, Tax Returns and documents of the Company Entities (and the assistance of employees responsible for such books, records and documents) during regular business hours as may be reasonably necessary for (i) investigating, settling, preparing for the defense or prosecution of, defending or prosecuting any Action, (ii) preparing reports to stockholders and Government Authorities or (iii) such other purposes for which access to such documents is determined by Seller to be reasonably necessary, including preparing and delivering any accounting or other statement provided for under this Agreement or otherwise, preparing Tax Returns, pursuing Tax refunds or responding to or disputing any Tax audit, or the determination of any matter relating to the rights and obligations of Seller or any of its Affiliates under this Agreement; provided, however, that access to such books, records, documents and employees shall not interfere with the normal operations of Purchaser, its Affiliates or the Company Entities and the reasonable out-of-pocket expenses of Purchaser, its Affiliates and the Company Entities incurred in connection therewith shall be paid by Seller. Purchaser shall cause each Company Entity to maintain and preserve all such Tax Returns, books, records and other documents for any applicable statutory or regulatory retention period, as the same may be extended and, in each case, shall offer to transfer such records to Seller at the end of any such period. Notwithstanding anything herein to the contrary, Purchaser shall not be required to provide any access or information to Seller, its

Affiliates or any of their respective Representatives which Purchaser reasonably believes they or the Company Entities are prohibited from providing to Seller, its Affiliates or their respective Representatives by reason of applicable Law, which constitutes or allows access to information protected by attorney-client privilege, or which Purchaser or the Company Entities are required to keep confidential or prevent access to by reason of any Contract with a third party or which would otherwise expose Purchaser or any of its Affiliates (including the Company Entities) to a material risk of Liability.

6.07 Offers of Employment and Terminations .

(a) At least sixty (60) days prior to the Closing Date, Purchaser shall, or shall cause any applicable relevant Affiliates or designated third-party operators to, make offers of employment to each Business Employee listed on Schedule 6.07(a) , which offers shall comply with the requirements set forth in this Section 6.07 . Without limiting the foregoing, Purchaser currently intends to offer employment to each Business Employee who performs operational services to the Company or any of the Subsidiaries in Louisiana. Notwithstanding the foregoing, except as otherwise required pursuant to the terms of a Collective Bargaining Agreement or other applicable Law, the Purchaser does not intend to offer employment to any Business Employee who, as of the Closing Date, is on short- or long-term disability or workers compensation, unless and until such Business Employee on short-term disability is able (in the judgment of the Purchaser) to return to active employment for the Company or Subsidiary within three (3) months following the Closing Date and Seller and its Affiliates shall retain all Liabilities in respect of such Business Employees unless and until such Business Employee becomes employed by the Company or any Subsidiary within such three (3) month period. Each such offer of employment shall be for a position having a comparable title and comparable duties as provided to the applicable offered Business Employee as of immediately prior to Closing. The Business Employees who accept the terms and conditions of such offers and who become employed by Purchaser, any of its relevant Affiliates or any designated third-party operators are hereinafter referred to as the “ Continuing Employees .” Seller shall release each Continuing Employee from any confidentiality agreement or other restrictive covenant agreement solely as it applies to Purchaser and solely with respect to matters relating to the Business, any of the Company Entities or the sale of the Projects that may interfere with such Continuing Employee’s prospective employment with Purchaser, such Affiliate or such designated third-party operator.

(b) With respect to all Continuing Employees who are covered by a Collective Bargaining Agreement as of the Closing (“ Transferred Union Employees ”), Purchaser shall, or shall cause any applicable relevant Affiliates or designated third-party operators employing such Transferred Union Employees to, assume the terms and conditions of the applicable Collective Bargaining Agreement.

(c) With respect to all Continuing Employees who are not covered by a Collective Bargaining Agreement as of the Closing (“ Transferred Non-Union Employees ”), Purchaser shall be solely responsible for all pay and benefits and other costs, expenses, Liabilities, claims, wages, accrued vacation, sick or paid time off, severance, separation, Taxes, unemployment, and all other obligations and Liabilities of any nature whatsoever relating to the period on and after the Lockbox Start Date with respect to the Transferred Non-Union Employees, except for 2017 AIP Incentive Bonuses.

(d) Seller shall remain liable for all pay and benefits and other costs, expenses, Liabilities, claims, wages, Taxes and all other obligations and Liabilities of any nature whatsoever (including any Liabilities under any Company Employee Plan) relating to (i) the period prior to the Lockbox Start Date with respect to the Business Employees that become Continuing Employees relating in any way to their employment with Seller and (ii) relating to all periods before or after the Lockbox Start Date with respect to Business Employees who do not become Continuing Employees relating in any way to their employment with Seller (collectively, “ Seller Employment Liabilities ”); provided that, for the avoidance of doubt, Seller Employment Liabilities shall include 2017 AIP Incentive Bonuses.

(e) Purchaser shall ensure that each Transferred Non-Union Employee shall (i) be paid, for at least twelve (12) months following the Closing Date, an annual rate of salary or an hourly wage that is not less than what is being paid to such Continuing Employee immediately prior to the Closing, (ii) (A) as of the Closing, be immediately eligible to participate in Employee Plans of Purchaser, its relevant Affiliates or designated third-party operator (other than equity compensation plans) that are substantially similar, in the aggregate, to those Employee Plans (other than equity compensation plans) covering similarly situated employees of Purchaser, its relevant Affiliates or designated third-party operator and (B) if applicable, receive a bonus opportunity for at least twelve (12) months following the Closing Date that is not less than what such Continuing Employee is eligible for immediately prior to the Closing, and (iii) as of the Closing, be credited by Purchaser, its Affiliates or designated third-party operator for all accrued vacation.

(f) Following the Closing Date, Purchaser agrees that for each Continuing Employee (i) Purchaser’s, its relevant Affiliates’ and their designated third-party operator’s Employee Plans, which are analogous to the Company Employee Plans, shall recognize all previous service recognized by such Company Employee Plans for the purpose of determining eligibility for and entitlement to benefits (except where doing so would result in a duplication of benefits), including vesting, and such Continuing Employees shall be eligible to receive benefits under, and participate in, such analogous Employee Plans to the same extent as similarly situated employees of Purchaser, its relevant Affiliates or designated third-party operator; and (ii) Purchaser will cause its, or its relevant Affiliate’s or designated third-party operator’s, group health plan to recognize all documented and verifiable deductibles and coinsurance payments accrued by the Continuing Employees prior to the Closing Date (for the plan year in which Closing occurs) (or, in the alternative, at Purchaser’s discretion, Seller shall provide to each Continuing Employee a cash payment in lieu of such recognition of deductible and coinsurance payments) and to waive any preexisting condition limitations, actively at work exclusions and waiting periods for the Continuing Employees. Notwithstanding the foregoing, (1) no Transferred Union Employee who is not participating as of the date hereof in a defined benefit plan of Seller and no Transferred Non-Union Employee shall be eligible for, entitled to or accrue any benefits under any defined benefit plan of Purchaser, its Affiliates or designated third party operators, and (2) Transferred Union Employees who are participating in a defined benefit plan of Seller as of the date hereof shall be eligible to participate in a cash balance defined benefit plan established or maintained by Purchaser, its Affiliates or designated third party operators and such Transferred Non-Union Employees shall receive credit for prior service with Seller and its

Affiliates for purposes of determining pay credits under any such cash balance defined benefit plan of Purchaser, its Affiliates or designated third party operators in accordance with the terms of the applicable Collective Bargaining Agreement in effect at the time.

(g) Following the Closing Date, to the extent any Company Employee Plan is qualified under Section 401(a) of the Code, Purchaser shall take the necessary action to cause Purchaser’s, its relevant Affiliate’s or designated third-party operator’s defined contribution plan or plans to accept a trustee-to-trustee transfer of account balances of the Continuing Employees from such Company Employee Plan, including outstanding plan loans of Continuing Employees from any Company Employee Plan, which is a qualified defined contribution plan, in which Continuing Employees are participating immediately prior to Closing Date.

(h) With respect to any “mass layoff” or “plant closing” as defined by the WARN Act or similar applicable state or local Law affecting any of the Business Employees or other individuals performing work or services related to or for the Business or the Company Entities, Seller shall, or shall cause its Affiliates or third party operators, as applicable, to: (i) comply fully with the WARN Act and any and all similar applicable state and local Laws, (ii) perform and discharge the obligation, if any, to serve in a timely manner and fashion all notices required by the WARN Act or similar applicable state or local Law to Business Employees (“ WARN Notices ”) or other individuals performing work or services related to or for the Business or the Company Entities who may be legally classified as employees of Seller or any Affiliate of Seller or third party operator, as applicable, and (iii) cooperate with Purchaser in providing WARN Notices following the date hereof to the extent reasonably requested by Purchaser.

(i) Nothing in this Agreement is intended to, or shall, (i) establish, amend or modify any employee benefit plan (including any Employee Plan), (ii) affect the rights of Seller, Purchaser, or any of their respective Affiliates to amend, modify or terminate any employee benefit plan (including any Employee Plan) pursuant to the terms of such plan or any applicable Collective Bargaining Agreement, (iii) confer upon any Business Employee any right to employment or continued employment for any period of time, or any right to a particular term or condition of employment, (iv) limit the right of Seller, Purchaser, or any of their respective Affiliates, as applicable, to change or eliminate any term or condition of employment or the compensation or benefits available to any Business Employee, or to terminate the employment of any such employee, or (v) without limiting anything in Section 6.07 , confer any third-party beneficiary or other rights on any Person, including any Business Employee, other than the parties to this Agreement.

ARTICLE 7

CONDITIONS TO OBLIGATIONS OF

PURCHASER

The obligations of Purchaser hereunder to purchase the Acquired Interests are subject to the fulfillment, at or before the Closing, of each of the following conditions (all or any of which may be waived in whole or in part by Purchaser in its sole discretion):

7.01 Bring-Down of Seller’s and the Company’s Representations and Warranties . Other than the Fundamental Representations, the representations and warranties made by each of Seller and the Company in this Agreement shall be true and correct in all material respects (except for any of such representations and warranties that are qualified by materiality, including by reference to Material Adverse Effect or any similar qualification, which shall be true and correct in all respects) in each case on and as of the Effective Date and on and as of the Closing Date as though such representations and warranties were made on and as of the Closing Date, except for such representations and warranties that are expressly stated to be made on and as of a specific earlier date, in which case as of such earlier date. The Fundamental Representations made by each of Seller and the Company in this Agreement (read for purposes of this Section 7.01 without regard to any materiality or Material Adverse Effect qualification or any similar qualification) shall be true and correct in all respects in each case on and as of the Effective Date and on and as of the Closing Date as though such representations and warranties were made on and as of the Closing Date, except for such representations and warranties that are expressly stated to be made on and as of a specific earlier date, in which case as of such earlier date.

7.02 Performance at Closing . Seller and the Company shall have performed all agreements, covenants and obligations required by this Agreement to be so performed by Seller and the Company at or before the Closing, including the Oxbow Property Transfer.

7.03 Litigation . No Order shall have been entered which restrains, enjoins or otherwise prohibits or makes illegal the consummation of any of the transactions contemplated by this Agreement and no Action or Proceeding shall have been instituted before any Governmental Authority of competent jurisdiction seeking to restrain, enjoin or otherwise prohibit or make illegal the consummation of any of the transactions contemplated by this Agreement.

7.04 Assignment of Membership Interests . Certificates representing the Acquired Interests, duly endorsed for transfer to Purchaser or accompanied by one or more membership interest powers duly endorsed for transfer to Purchaser shall have been delivered to Purchaser.

7.05 Approvals and Consents . All Seller Approvals shall have been obtained and shall be in full force and effect pursuant to final and non-appealable orders (not subject to any unfulfilled conditions to their effectiveness) and shall not impose terms or conditions that, individually or in the aggregate, are or would be reasonably expected to (directly or indirectly) materially and adversely effect, modify, alter or change this Agreement (or any of the rights, preferences or obligations thereunder) or otherwise materially burden the assets, liability, operation or business of any of the Company Entities after the Closing. All Seller Consents shall have been obtained and shall be in full force and effect and in form and substance reasonably

satisfactory to the Purchaser, except where the failure to receive any such Seller Consent in form and substance reasonable satisfactory to Purchaser is a result of Purchaser’s breach of its obligations under this Agreement.

7.06 Officers’ Certificates . Seller shall have delivered to Purchaser (a) a certificate, dated the Closing Date and executed by an authorized officer or board member of Seller substantially in the form and to the effect of Exhibit D ; (b) a certificate, dated the Closing Date and executed by an authorized officer or board member of the Company substantially in the form and to the effect of Exhibit E ; (c) a certificate, dated the Closing Date and executed by the Secretary of Seller substantially in the form and to the effect of Exhibit F ; and (d) a certificate (the “ Leakage/Indebtedness Certificate ”), dated the Closing Date and executed by an authorized officer or board member of Seller, certifying as to (i) the aggregate amount of Leakage during the Lockbox Period, together with a breakdown thereof, and (ii) the aggregate amount of Indebtedness of the Company Entities as of the Balance Sheet Effective Date and the Closing Date, in each case together with a breakdown thereof.

7.07 FIRPTA Certificate . Seller shall have caused to be delivered a certificate, dated as of the Closing Date and substantially in the form and to the effect of Exhibit G , which satisfies the requirements set forth in Treasury Regulation Section 1.1445-2, attesting that Seller is not a “foreign person” for U.S. federal income tax purposes.

7.08 Antitrust Authorizations . All applicable waiting periods (and any extensions thereof) under the HSR Act shall have expired or been terminated.

7.09 FPA Matters . FERC authorization under section 203 of the FPA required to consummate the transactions contemplated hereby shall have been obtained and shall be on such terms as could not reasonably be expected to require Purchaser to take actions specified in provisos (A), (B), (C), or (D) of Section 6.01(d) or otherwise to (i) materially impair the authority, right or ability of Purchaser to consummate the transactions, (ii) have a material adverse effect on the business, assets, properties, financial condition, results of operations or prospects of the Business or Purchaser, (iii) require any material modification to this Agreement or the transactions contemplated hereby or (iv) impose any material restrictions upon Purchaser’s ownership or operation of the Projects or Purchaser’s or Purchaser’s Affiliates’ ownership of their respective assets or operation of their respect businesses, including the ability to engage in wholesale sales of energy capacity and ancillary services at market based rates, or any restrictions on use of acquired contracts, or required divestitures.

7.10 LPSC Matters All regulatory authorizations and regulatory waivers required by and from the LPSC to consummate the transactions and financing contemplated hereby shall have been obtained and shall be in full force and effect, and such regulatory authorizations and regulatory waivers shall be on terms and in form and substance satisfactory to Purchaser and Purchaser Parent each in its sole judgment and discretion.

7.11 Agreements . Seller shall have delivered to Purchaser (i) the insurance assignment documents reasonably requested by Purchaser prior to the Closing under Section 5.06 , (ii) a lease agreement (the “ Cottonwood Lease ”) between Cottonwood Energy and a special-purpose entity that is a subsidiary of Seller, duly executed by the parties thereto, in substantially the form of

Exhibit L, (iii) the guaranty contemplated by paragraph 26 of the Cottonwood Lease, duly executed by Seller, (iv) the issued letter of credit contemplated by paragraph 28 of the Cottonwood Lease, together with the agreement from the issuing bank thereof contemplated by paragraph 28(c) of the Cottonwood Lease, (v) a transition services agreement between Seller and Purchaser, duly executed by Seller, containing the terms and conditions set forth in Exhibit M and in form and substance reasonably satisfactory to Purchaser, (vi) the LTSA Rights Agreement, duly executed by Seller, and (vii) the Put Option Agreement, duly executed by Seller.

7.12 No Change . Since the Effective Date, there shall not have been a Material Adverse Effect with respect to the Company Entities or of the Business taken as a whole.

7.13 Mortgages . The Existing Mortgages and all Liens relating thereto shall have been terminated and released in full, pursuant to payoff letters or other documentation in form and substance reasonably satisfactory to Purchaser.

7.14 Assigned Contracts . Seller shall have caused the contracts set forth on Schedule 7.14 to be assigned by the Affiliate of Seller party thereto to a Company Entity designated by Purchaser, pursuant to assignment documentation in form and substance reasonably satisfactory to Purchaser

7.15 CFIUS . Purchaser shall have received pursuant to the U.S. Foreign Investment and National Security Act, either (i) notice from CFIUS of its determination not to undertake an investigation of the transactions contemplated by this Agreement or (ii) in the event that CFIUS initiates an investigation of the transactions contemplated by this Agreement, a written confirmation that CFIUS has determined there are no unresolved national security concerns with respect to the transactions contemplated by this Agreement.

7.16 Solvay Chemicals Agreement . Seller shall have caused LA Generating to enter into an agreement with Solvay Chemicals, Inc. terminating all of LA Generating rights and obligations, and extinguishing all of LA Generating’s liability, under the Solvay Chemicals Agreement (as defined on Schedule 3.12(a)) as of the earlier of (a) the Closing Date and (b) the date on which LA Generating enters into a replacement agreement for the products described in the Solvay Chemicals Agreement on terms and conditions satisfactory to Purchaser.

ARTICLE 8

CONDITIONS TO OBLIGATIONS OF SELLER

The obligations of Seller hereunder to sell the Acquired Interests are subject to the fulfillment, at or before the Closing, of each of the following conditions (all or any of which may be waived in whole or in part by Seller, in its sole discretion).

8.01 Bring-Down of Purchaser’s Representations and Warranties . The representations and warranties made by Purchaser in Article 4 of this Agreement shall be true and correct in all material respects as of the Closing Date (except for any of such representations and warranties that are qualified by materiality which shall be true and correct in all respects) as though such representations and warranties were made on and as of the Closing Date, except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such

earlier date.

8.02 Performance at Closing . Purchaser shall have performed all agreements, covenants and obligations required by the PSA to be so performed at or before the Closing.

8.03 Approvals and Consents . The Purchaser Approval set forth in item 2 of Schedule 4.09 to the extent required for the consummation of the transactions contemplated hereby shall have been obtained and shall be in full force and effect.

8.04 Litigation . No Order shall have been entered which restrains, enjoins or otherwise prohibits or makes illegal the consummation of any of the transactions contemplated by this Agreement and no Action or Proceeding shall have been instituted before any Governmental Authority of competent jurisdiction seeking to restrain, enjoin or otherwise prohibit or make illegal the consummation of any of the transactions contemplated by this Agreement.

8.05 Deliveries . Purchaser shall have delivered to Seller:

(a) a certificate, dated the Closing Date and executed by an authorized officer or board member of Purchaser, substantially in the form and to the effect of Exhibit H ; and

(b) a certificate, dated the Closing Date and executed by the Secretary of Purchaser substantially in the form and to the effect of Exhibit I .

8.06 Antitrust Authorizations . All applicable waiting periods (and any extensions thereof) under the HSR Act shall have expired or been terminated.

8.07 FPA Matters . FERC authorization under section 203 of the FPA required to consummate the transactions contemplated hereby shall have been obtained.

8.08 CFIUS . Seller shall have received from Purchaser a copy of either (i) a notice from CFIUS of its determination not to undertake an investigation of the transactions contemplated by this Agreement or (ii) in the event that CFIUS initiates an investigation of the transactions contemplated by this Agreement, a written confirmation that CFIUS has determined there are no unresolved national security concerns with respect to the transactions contemplated by this Agreement.

8.09 Agreements . Purchaser shall have delivered to Seller (i) a transition services agreement between Seller and Purchaser, duly executed by Purchaser, containing the terms and conditions set forth in Exhibit M and in form and substance reasonably satisfactory to Seller, (ii) the Cottonwood Lease, duly executed by Purchaser, (iii) the LTSA Rights Agreement, duly executed by Purchaser and (iv) the Put Option Agreement, duly executed by Purchaser.

ARTICLE 9

TAX MATTERS

9.01 Certain Taxes .

(a) All real property Taxes, personal property Taxes and similar obligations of the Company and the Subsidiaries imposed by any Governmental Authority that are due or become due for Tax periods within which the Closing Date occurs shall be apportioned between the pre-Closing Date period, on the one hand, and the post-Closing Date period, on the other hand, as of the Closing Date, based upon the actual number of days of the Tax period that have elapsed before and including, and after, the Closing Date, and all income Taxes and Transfer Taxes imposed on the Company and the Subsidiaries shall be allocated between the pre-Closing Date period and the post-Closing Date period as though a taxable year of the Company and the Subsidiaries have ended on the Closing Date. Seller shall be responsible for the portion of such Taxes described in the preceding sentence (the “ Apportioned Obligations ”) attributable to the pre-Closing Date period. Purchaser shall be responsible for such Apportioned Obligations attributable to the period beginning on or after the Closing Date. Each Party shall cooperate in assuring that Apportioned Obligations that are the responsibility of Seller pursuant to the preceding sentences are paid by Seller, and that Apportioned Obligations that are the responsibility of Purchaser pursuant to the preceding sentence shall be paid by Purchaser. If any refund, rebate or similar payment is received by the Company, the Subsidiaries, Seller and/or Purchaser for any Taxes that are Apportioned Obligations, such refund shall be apportioned between Seller and Purchaser as aforesaid on the basis of the obligations of the Company and the Subsidiaries during the applicable Tax period, provided any such Tax refund shall belong to Purchaser if it was included as an asset in the Final Aggregate Net Working Capital.

(b) Seller shall timely prepare and file with the appropriate authorities all Tax Returns required to be filed by the Company or the applicable Subsidiary with respect to any Tax periods ending on or before the Closing Date. Such Tax Returns shall be prepared and filed in a manner consistent with prior positions and past practice to the extent consistent with applicable Law. Seller shall provide Purchaser with a completed draft of such Tax Return if it relates to income Taxes or other material Taxes for Purchaser's review as soon as reasonably practicable once a draft is available. Seller will consider in good faith any reasonable changes to such Tax Return timely proposed by Purchaser and provide Purchaser with a copy of any such revised Tax Return as soon as reasonably practicable after filing. Seller shall timely remit (or cause to be timely remitted by the applicable Company Entity) any Taxes shown as due on any such Tax Return, except to the extent such Taxes do not exceed the liabilities for such Taxes specifically taken into account in determining the Final Aggregate Net Working Capital.

(c) Seller and Purchaser shall reasonably cooperate, and shall cause their respective Affiliates, employees and agents reasonably to cooperate, in preparing and filing all Tax Returns of the Company and each Subsidiary, including maintaining and making available to each other all records that are necessary for the preparation of any Tax Returns that the Party is required to file under this Article 9 , and in resolving all disputes and audits with respect to such Returns.

(d) All sales, use, transfer, controlling interest transfer, recording, stock transfer, real property transfer, value-added and other similar Taxes and fees (“ Transfer Taxes ”), if any, arising out of or in connection with the consummation of the transactions contemplated by this Agreement shall be shared equally by Purchaser and Seller. Tax

Returns that must be filed in connection with such Transfer Taxes shall be prepared and filed by the Party primarily or customarily responsible under applicable local Law for filing such Tax Returns, and such party will use commercially reasonable efforts to provide such Tax Returns to the other Party at least ten (10) Business Days prior to the date such Tax Returns are due to be filed.

9.02 Allocation of Purchase Price .

(a) The Purchase Price (including for these purposes the amount of any assumed liabilities included as a part of the purchase price for U.S. federal income Tax purposes) shall be allocated among the Company Entity assets in the manner required by Section 1060 of the Code and the Treasury regulations promulgated thereunder (and any similar provision of state, local or non-U.S. Law) (the “ Allocation ”). A draft Allocation shall be prepared by Purchaser for the review and approval of Seller within sixty (60) days after the date of Closing. If within thirty (30) days after delivery of the Allocation, Seller notifies Purchaser in writing that Seller objects to the allocation set forth in the Allocation, Purchaser and Seller shall use commercially reasonable efforts to resolve such dispute within thirty (30) days thereafter. In the event that Purchaser and Seller are unable to resolve such dispute within such thirty (30) day period, Purchaser and Seller shall, within thirty (30) days after such thirty (30) day period, submit the disputed items to the Neutral Auditor for resolution under the procedures set forth in this Section. Purchaser and Seller shall make available to the Neutral Auditor, in connection with the foregoing, all relevant work papers relating to the Allocation calculation. Each Party agrees to promptly execute a reasonable engagement letter, if requested to do so by the Neutral Auditor. Purchaser and Seller, and their respective Representatives, shall cooperate fully with the Neutral Auditor. The Neutral Auditor, acting as an expert and not an arbitrator, shall resolve such disputed items and determine the values to be ascribed thereto, and using those values (together with other items not in dispute) determine the final Allocation as of the Closing Date. The Parties hereby agree that the Neutral Auditor shall only decide the specific disputed items, the values ascribed thereto and using those values (together with the other items included in the draft Allocation) determine the final Allocation, and the Neutral Auditor’s decision with respect to such disputed items and values must be within the range of values assigned to each such item in the draft Allocation and the notice of objection, respectively. All fees and expenses relating to the work, if any, to be performed by the Neutral Auditor will be borne equally by Purchaser and Seller. The Neutral Auditor shall be directed to resolve the disputed items and amounts and deliver to Purchaser and Seller a written determination of the final Allocation (such determination to be made consistent with this Section, including a worksheet setting forth all material calculations used in arriving at such determination and to be based solely on information provided to the Neutral Auditor by Purchaser and Seller) within thirty (30) days after being retained (or such longer period as the Neutral Auditor may reasonably require), which determination will be final, binding and conclusive on the Parties and their respective Affiliates and representatives, successors and assigns. Notwithstanding anything herein to the contrary, the dispute resolution mechanism contained in this Section shall be the exclusive mechanism for resolving disputes, if any, regarding the Allocation and neither Seller nor Purchaser shall be entitled to indemnification pursuant to Article 11 for Losses resulting or arising from the Allocation.

(b) Purchaser and Seller shall file all Tax Returns (including, but not limited to, IRS Form 8594) consistent with the Allocation. Neither Purchaser nor Seller shall take any Tax position inconsistent with such Allocation and neither Purchaser nor Seller shall agree to any proposed adjustment to the Allocation by any Taxing authority without first giving the other party prior written notice; provided, however, that nothing contained herein shall prevent Purchaser or Seller from settling any proposed deficiency or adjustment by any Taxing authority based upon or arising out of the Allocation, and neither Purchaser nor Seller shall be required to litigate before any court any proposed deficiency or adjustment by any taxing authority challenging such Allocation.

(c) Not later than ten (10) Business Days prior to the filing of their respective IRS Forms 8594 relating to this transaction, each of Purchaser and Seller shall deliver to the other party a copy of its IRS Form 8594. If the Final Purchase Price is adjusted pursuant to this Agreement, the Allocation shall be adjusted in a manner consistent with such adjustment.

(d) Seller and Purchaser agree that the final Allocation shall be used by Seller and Purchaser as the basis for reporting asset values and other items for purposes of all federal, state, and local Tax Returns, and that neither Seller nor Purchaser or their respective Affiliates will take positions inconsistent with such allocation in notices to any Governmental Authority, in audits or other proceedings with respect to Taxes, or in other documents or notices relating to the transactions contemplated by this Agreement.

ARTICLE 10

SURVIVAL

10.01 Survival of Representations, Warranties, Covenants and Agreements . The representations, warranties, covenants, agreements and obligations of Seller, the Company and Purchaser contained in this Agreement are material, were relied on by such Parties, and will survive the Closing Date as provided in Section 11.03 . The right to indemnification, reimbursement or other remedy based upon such representations, warranties, covenants, agreements and obligations shall not be affected by any investigation conducted, or any Seller’s Knowledge or Purchaser’s Knowledge acquired at any time, whether before or after the execution of this Agreement or the Closing Date, with respect to the accuracy or inaccuracy of or compliance with any such representation, warranty, covenant, agreement or obligation. Each Party shall be entitled to rely upon the representations and warranties of the other Party set forth herein notwithstanding any investigation or audit conducted before or after the Closing Date or the decision of any Party to complete the Closing.

ARTICLE 11

INDEMNIFICATION

11.01 Indemnification by Seller . Seller hereby indemnifies and holds harmless the Purchaser Indemnified Parties in respect of, and holds each of them harmless from and against, and will pay to the Purchaser Indemnified Parties the amount of, any and all Losses suffered, incurred or sustained by any of them or to which any of them become subject, resulting from, arising out of or relating to:

(a) the breach of any of the representations and warranties made by Seller or the Company to the Purchaser in Article 3 of this Agreement or any breach of any representation in respect thereof contained in any certificate delivered by Seller or the Company pursuant to this Agreement;

(b) any breach or failure to perform or comply with by Seller or the Company of any covenant or agreement of Seller or the Company contained in this Agreement;

(c) (i) one hundred percent (100%) of the Specific Environmental Indemnification Items up to and including five million dollars ($5,000,000) and (ii) seventy-five percent (75%) of the Specific Environmental Indemnification Items in excess of five million dollars ($5,000,000);

(d) seventy-five percent (75%) of any Losses arising exclusively from violations of Clean Air Act New Source Review resulting from capital, operation or maintenance projects undertaken prior to the Closing;

(e) (i) any Taxes of or required to be paid by the Company Entities with respect to any period or portion thereof ending on or before the Closing Date, (ii) Taxes of Seller (including, without limitation, capital gains Taxes arising as a result of the transactions contemplated by this Agreement) or any of Seller’s Affiliates (excluding the Company Entities) for any Tax period; (iii) Taxes attributable to any restructuring or reorganization undertaken by Seller, its Affiliates or the Company Entities prior to the Closing; (iv) Taxes for which any of the Company Entities (or any predecessor of the foregoing) is held liable under Section 1.1502-6 of the United States Treasury Regulations (or any similar provision of state, local or non-U.S. Law) by reason of such entity being included in a consolidated, affiliated, combined or unitary group at any time on or before the Closing Date; (v) Taxes imposed on or payable by third parties with respect to which any of the Company Entities has an obligation to indemnify such third party as a transferee or successor or pursuant to a transaction consummated on or prior to the Closing; and (vi) any Taxes arising out of or resulting from the payment of any debt of a Company Entity on or before the Closing; provided, however, that the Seller shall have no liability under this Section 11.01(d) for any Taxes to the extent such Taxes were specifically reflected in the Final Aggregate Net Working Capital Amount;

(f) the Oxbow Property or the Oxbow Property Transfer;

(g) the matter described in Item No. 2 (as defined on Schedule 3.08 ) or any of the facts or circumstances underlying such matter; provided that, for the avoidance of doubt, such Losses shall include any required disgorgement of revenues, refunds of rates, charges or collections, civil or criminal penalties imposed on the operations of the Company Entities, the Business or the Projects whether before or after Closing;

(h) the Actions or Proceedings set forth on Schedule 11.01(h) or any of the facts or circumstances underlying such Actions or Proceedings, including any Action or Proceeding brought by any Person based on similar facts or circumstances underlying such Actions or Proceedings;

(i) the Actions or Proceedings set forth on Schedule 11.01(i) or any of the facts or circumstances underlying such Actions or Proceedings, including any Action or Proceeding brought by any Cooperative Customer based on similar facts or circumstances underlying such Actions or Proceedings, in each case limited to damages awarded or settlement amounts owed to the Cooperative Customers in respect of the period prior to the Closing Date;

(j) the aggregate amount of Leakage to the extent the actual amount thereof exceeds the amount set forth in the Leakage/Indebtedness Certificate; and

(k) the aggregate amount of Indebtedness of the Company Entities as of the Closing Date to the extent the actual amount thereof exceeds the amount set forth in the Leakage/Indebtedness Certificate.

11.02 Indemnification by Purchaser . Purchaser hereby indemnifies and holds harmless the Seller Indemnified Parties in respect of, and holds each of them harmless from and against, and will pay to the Seller Indemnified Parties the amount of, any and all Losses suffered, incurred or sustained by any of them or to which any of them become subject, resulting from, arising out of or relating

(a) the breach of any of the representations and warranties made by Purchaser to the Seller in Article 4 of this Agreement or any breach of any representation in respect thereof contained in any certificate delivered by Purchaser pursuant to this Agreement; or

(b) any breach or failure to perform or comply with by Purchaser of any covenant or agreement of Purchaser contained in this Agreement.

11.03 Period for Making Claims . No claim under this Agreement (except as provided below) may be made unless such Party shall have delivered, with respect to any claim for breach of any representation, warranty, covenant, agreement or obligation made in this Agreement, a written notice of claim prior to the date falling eighteen (18) months after the Closing Date; except that:

(i) the representations and warranties contained in Section 3.01 (Existence), Section 3.02 (Authority), Section 3.07 (Brokers), Sections 3.09(a) , (b) , (d) , (f) , and (h) (The Company and the Subsidiaries), Section 4.01 (Existence), Section 4.02 (Authority), and Section 4.08 (Brokers) shall survive the Closing indefinitely (collectively, with the representation and warranties contained in Section 3.11 (Taxes), the “ Fundamental Representations ”);

(ii) the representations and warranties in Section 3.11 (Taxes) and the indemnification under Section 11.01(a) pertaining thereto and under Section 11.01(e) shall survive until thirty (30) days after the expiration of the applicable Tax statute of limitations;

(iii) the representations and warranties contained in Section 3.15 (Environmental) shall survive the Closing for five (5) years following the Closing Date;

(iv) the representations and warranties contained in Section 3.13 (Real

Property) and Section 3.14 (Title) shall survive the Closing for four (4) years following the Closing Date;

(v) the representations and warranties in Section 3.29 (Projects Condition) shall survive the Closing for a period beginning on the later of (x) that September 30 most closely following the Closing Date, and (y) the Closing Date and ending six (6) months after the later to occur of (x) and (y);

(vi) the Specific Environmental Indemnification Items in Section 11.01(c) shall survive the Closing for six (6) years following the Closing Date;

(vii) claims pursuant to Section 11.01(d) shall survive the Closing for five (5) years following the Closing Date;

(viii) claims pursuant to Sections 11.01(f) , 11.01(g) , 11.01(h) , 11.01(i) , 11.01(j) , and 11.01(k) shall survive the Closing indefinitely; and

(ix) the covenants, agreements and obligations in this Agreement to be performed shall survive until the date on which they have been fully performed;

provided further , that, if written notice for a claim of indemnification has been provided by the Indemnified Party pursuant to Section 11.05(a) or Section 11.07 on or prior to the applicable survival expiration date, then the obligation of the Indemnifying Party to indemnify the Indemnified Party pursuant to this Article 11 shall survive with respect to such claim until such claim is finally resolved. With respect to any claims related to violations or possible violations of an applicable NERC reliability standard, no claim under this Agreement may be made unless such Party shall have delivered, with respect to any such claim for breach of any representation, warranty, covenant, agreement or obligation made in this Agreement, a written notice of claim prior to the date occurring six months after the conclusion of any Regional Entity compliance audit covering a period prior to the Closing Date.

11.04 Limitations on Claims .

(a) No Party shall have any obligation to indemnify an Indemnified Party until the aggregate amount of all Losses incurred by such Party that are subject to indemnification pursuant to Section 11.01(a) or Section 11.02(a) , as applicable, equals or exceeds one percent (1%) of the Final Purchase Price (the “ Deductible ”) in which event the Indemnifying Party shall be obligated to pay in full all such Losses (commencing with the first dollar thereof); provided , however , that the Deductible shall not apply to Losses resulting from, arising out of or relating to (w) any breach of the Fundamental Representations, (x) any breach of the representations and warranties set forth in Section 3.15 (Environmental), Section 3.26 (No Debt), or the second sentence of Section 3.03, (y) any willful breach of any representation or warranty or (z) fraud.

(b) No Party shall have any obligation to indemnify an Indemnified Party in connection with any single item or group of related items that result in Losses that are subject to indemnification pursuant to Section 11.01(a) or Section 11.02(a) , as applicable, in the aggregate of less than Fifty Thousand Dollars ($50,000); provided, however, that such

threshold shall not apply to Losses resulting from, arising out of or relating to (i) any breach of the Fundamental Representations, (ii) any breach of the representations and warranties set forth in Section 3.15 (Environmental) or Section 3.26 (No Debt), (iii) any willful breach of any representation or warranty, or (iv) fraud.

(c) Except as otherwise provided in Section 11.04(d) , the aggregate liability of the Indemnifying Parties under this Article 11 resulting from breaches of representations or warranties herein and in any certificates delivered pursuant hereto shall be limited to an amount equal to twelve percent (12%) of the Final Purchase Price (the “ Cap ”); provided , however , that the Cap shall not apply to Losses resulting from, arising out of or relating to (i) any breach of the Fundamental Representations, (ii) any breach of the covenant set forth in Section 5.07 or the representation or warranty set forth in Section 3.26 (No Debt), (iii) Losses covered by Sections 11.01(b) , 11.01(c) (which is subject to the Special Item Cap), 11.01(e) , 11.01(f) , 11.01(g) , 11.01(h) , 11.01(i) , 11.01(j) or 11.01(k) , (iv) any willful breach of any representation or warranty, or (v) fraud.

(d) Separate from the Cap established in Section 11.04(c) , the aggregate liability of the Indemnifying Parties under this Article 11 resulting from Losses covered by Section 11.01(c) shall be limited to an amount equal to twenty-five million dollars ($25,000,000) (the “ Special Item Cap ”); provided , however , that Seller shall have no obligation to indemnify a Purchaser Indemnified Party for any Losses covered by Section 11.01(c) that are incurred to defend an Action or Proceeding that does not result in a prohibition on the placement of CCR or non-CCR waste-streams in an impoundment or closure of an impoundment until the aggregate amount of such Losses equals or exceeds Two Million Dollars ($2,000,000) (“ Special Item Deductible ”), in which event the Seller shall be liable for such Losses only to the extent they are in excess of the Special Item Deductible; provided, further, that neither the Special Item Cap nor the Special Item Deductible shall apply to Losses resulting from, arising out of or relating to (i) any willful breach of any representation or warranty or (ii) fraud.

(e) For purposes of this Article 11 , any inaccuracy in or breach of any representation or warranty shall be determined without regard to any materiality, Material Adverse Effect or other similar qualification contained in or otherwise applicable to such representation or warranty.

(f) In the event that any Losses are subject to indemnification pursuant to both (x) Section 11.01(a) in respect of a breach of Section 3.15 and (y) Section 11.01(c):

(i) if there occurs a prohibition on the placement of CCR or non-CCR waste-streams in an impoundment or closure of an impoundment, such Losses shall be indemnifiable pursuant to Section 11.01(c) and the Special Item Cap shall apply (subject to the second proviso set forth in Section 11.04(d) ); and

(ii) if there does not occur a prohibition on the placement of CCR or non-CCR waste-streams in an impoundment or closure of an impoundment, such Losses shall be indemnifiable pursuant to Section 11.01(a) and the Cap shall apply (subject to the proviso set forth in Section 11.04(c) ).

11.05 Procedure for Indemnification of Third Party Claims.

(a) Notice . Whenever any claim by a third party shall arise for indemnification under this Article 11 , the Indemnified Party shall promptly notify the Indemnifying Party of the claim and, when known, the facts constituting the basis for such claim and, if known, the notice shall specify the amount or an estimate of the amount of the liability arising therefrom. The Indemnified Party shall provide to the Indemnifying Party copies of all material notices and documents (including court papers) received or transmitted by the Indemnified Party relating to such claim. The failure or delay of the Indemnified Party to deliver prompt written notice of a claim shall not affect the indemnity obligations of the Indemnifying Party hereunder, except to the extent the Indemnifying Party was actually materially disadvantaged by such failure or delay in delivery of notice of such claim.

(b) Settlement of Losses . If the Indemnified Party has assumed the defense of any claim by a third party which may give rise to indemnity hereunder pursuant to Section 11.06(d) , the Indemnified Party shall not settle, consent to the entry of a judgment of or compromise such claim without the prior written consent (which consent shall not be unreasonably withheld or delayed) of the Indemnifying Party.

11.06 Rights of Indemnifying Party in the Defense of Third Party Claims .

(a) Right to Assume the Defense . In connection with any claim by a third party which may give rise to indemnity hereunder, except any third party claim seeking equitable relief or any claim relating to Taxes (which the Indemnifying Party shall not have the right to assume defense thereof), the Indemnifying Party shall have thirty (30) days after the date the Indemnifying Party is notified of such claim by the Indemnified Party to assume the defense of any such claim, which defense shall be prosecuted by the Indemnifying Party to a final conclusion or settlement in accordance with the terms hereof.

(b) Procedure . If the Indemnifying Party assumes the defense of any such claim, the Indemnifying Party shall (i) select counsel reasonably acceptable to the Indemnified Party to conduct the defense of such claim and (ii) take all steps necessary in the defense or settlement thereof, at its sole cost and expense. The Indemnified Party shall be entitled to participate in (but not control) the defense of any such claim, with its own counsel and at its sole cost and expense; provided , that, if the claim includes allegations for which the Indemnifying Party both would and would not be obligated to indemnify the Indemnified Party, the Indemnifying Party and the Indemnified Party shall in that case jointly assume the defense thereof. The Indemnified Party and the Indemnifying Party shall fully cooperate with each other and their respective counsel in the defense or settlement of such claim and make available to the other Party all information reasonably available (unless it would adversely affect the ability of a Party to assert attorney-client privilege, attorney work product privilege or similar privilege). The Party in charge of the defense shall keep the other Party appraised at all times as to the status of the defense or any settlement negotiations with respect thereto.

(c) Settlement of Losses . The Indemnifying Party shall not consent to a settlement of or the entry of any judgment arising from, any such claim or legal proceeding,

without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld or delayed).

(d) Decline to Assume the Defense . The Indemnified Party may defend against any such claim, at the sole cost and expense of the Indemnifying Party, in such manner as it may deem reasonably appropriate, including settling such claim in accordance with the terms hereof if (i) the Indemnifying Party does not assume the defense of any such claim resulting therefrom within thirty (30) days after the date the Indemnifying Party is notified of such claim by the Indemnified Party or (ii) the Indemnified Party reasonably concludes that the Indemnifying Party is (a) not diligently defending the Indemnified Person, (b) not contesting such claim in good faith through appropriate proceedings or (c) has not taken such action (including the posting of a bond, deposit or other security) as may be necessary to prevent any action to foreclose a Lien against or attachment of any asset or property of the Indemnified Party for payment of such claim.

(e) Defense of Certain Claims . The Indemnified Party shall have the right to defend against and control any claim subject to indemnification pursuant to Section 11.01(c) , 11.01(d) or 11.01(i) , at its sole cost and expense (subject to, in the case Sections 11.01(c) and 11.01(d) , the percentage allocations with respect to Losses set forth therein), in such manner as it may deem reasonably appropriate; for the avoidance of doubt, Section 11.05 shall apply to the defense of any claim pursuant to this Section 11.06(e) . The Indemnifying Party shall be entitled to participate in (but not control) the defense of any such claim, with its own counsel and at its sole cost and expense. The Indemnified Party and the Indemnifying Party shall fully cooperate with each other and their respective counsel in the defense or settlement of such claim and make available to the other Party all information reasonably available (unless it would adversely affect the ability of a Party to assert attorney-client privilege, attorney work product privilege or similar privilege). The Indemnified Party shall keep the Indemnifying Party appraised at all times as to the status of the defense or any settlement negotiations with respect thereto. Notwithstanding anything contained herein to the contrary, Purchaser and its Affiliates shall have full control, in their discretion and without any obligation to consult with Seller or its Affiliates, of all negotiations with respect to, and the execution of, any extensions of or amendments to any Contracts with any Cooperative Customer; provided that, to the extent that any such extension or amendment contains an affirmative obligation to make a payment to any such Cooperative Customer that would be subject to indemnification pursuant to Section 11.01(i) , the prior written consent of Seller (which consent shall not be unreasonably withheld or delayed) shall be required. Purchaser and its Affiliates shall not enter into any such extension or amendment with a Cooperative Customer that contains a waiver of damages of the type claimed in the Actions or Proceedings set forth on Schedule 11.01(i) in respect of the period from the Closing Date through the date of such extension or amendment unless such extension or amendment also contains a waiver of such damages in respect of the period prior to the Closing Date; provided that the limitation in this sentence shall not apply if Seller's consent is required pursuant to the foregoing sentence and Seller withholds such consents.

11.07 Direct Claims . In the event that any Indemnified Party has a claim against any Indemnifying Party which may give rise to indemnity hereunder that does not involve a claim brought by a third party, the Indemnified Party shall promptly notify the Indemnifying Party of

the claim and the facts constituting the basis for such claim and, if known, the amount or an estimate of the amount of the liability arising therefrom. The failure or delay of the Indemnified Party to deliver prompt written notice of a claim shall not affect the indemnity obligations of the Indemnifying Party hereunder, except to the extent the Indemnifying Party was actually materially disadvantaged by such failure or delay in delivery of notice of such claim. If the Indemnifying Party does not notify the Indemnified Party within thirty (30) days from receipt of such claim notice that the Indemnifying Party disputes such claim, the amount of such claim shall be conclusively deemed a liability of the Indemnifying Party hereunder; however if the Indemnifying Party does notify the Indemnified Party that it disputes such claim within the required thirty (30) day period, the Parties shall attempt in good faith to agree upon the rights of the respective Parties with respect to such claim. If the Parties should so agree, a memorandum setting forth such agreement shall be prepared and signed promptly by both Parties. If such Parties shall not agree within the aforementioned thirty (30) day period, the Indemnified Party shall be entitled to take any action in law or in equity as such Indemnified Party shall deem necessary to enforce the provisions of this Article 11 against the Indemnifying Party; provided that, notwithstanding the foregoing, any disputes relating to the indemnity set forth in Section 11.01(i) shall be submitted following the expiry of such thirty (30) day period or by such earlier date as agreed by the parties to the Neutral Auditor for resolution under the procedures set forth in this Section 11.07 . Purchaser and Seller shall make available to the Neutral Auditor, in connection with the foregoing, all relevant work papers relating to the Leakage calculation. Each Party agrees to promptly execute a reasonable engagement letter, if requested to do so by the Neutral Auditor. Purchaser and Seller, and their respective Representatives, shall cooperate fully with the Neutral Auditor. The Neutral Auditor, acting as an expert and not an arbitrator, shall resolve such disputed items and determine the values to be ascribed thereto, and using those values (together with other items not in dispute) determine the final actual aggregate amount of Leakage. The Parties hereby agree that the Neutral Auditor shall only decide the specific disputed items, the values ascribed thereto and using those values determine the final actual aggregate amount of Leakage, and the Neutral Auditor’s decision with respect to such disputed items and values must be within the range of values assigned to each such item in the Leakage/Indebtedness Certificate and Purchaser's claim for indemnification pursuant to Section 11.01(i) , respectively. All fees and expenses relating to the work, if any, to be performed by the Neutral Auditor will be borne equally by Purchaser and Seller. The Neutral Auditor shall be directed to resolve the disputed items and amounts and deliver to Purchaser and Seller a written determination of the final actual aggregate amount of Leakage (such determination to be made consistent with this Section 11.07 , including a worksheet setting forth all material calculations used in arriving at such determination and to be based solely on information provided to the Neutral Auditor by Purchaser and Seller) within thirty (30) days after being retained (or such longer period as the Neutral Auditor may reasonably require), which determination will be final, binding and conclusive on the Parties and their respective Affiliates and representatives, successors and assigns. Notwithstanding anything herein to the contrary, the dispute resolution mechanism contained in this Section 11.07 involving the Neutral Auditor shall be the exclusive mechanism for resolving disputes, if any, regarding any claim for indemnification pursuant to Section 11.01(i) .

11.08 General .

(a) Absent fraud or willful breach, the indemnities set forth in this Article 11

shall be the exclusive remedies of Purchaser and Seller and their respective members, officers, directors, employees, agents and Affiliates due to misrepresentation, breach of warranty, nonfulfillment or failure to perform any covenant or agreement contained in this Agreement, and the Parties shall not be entitled to a rescission of this Agreement or to any further indemnification rights or claims of any nature whatsoever in respect thereof, all of which the Parties hereto hereby waive. The provisions of this Article 11 shall not, however, prevent or limit a cause of action under Section 13.03 .

(b) Solely for purposes of calculating Losses for which an indemnity obligation arises under this Article 11 , any express qualification or limitation set forth in the applicable representation, warranty, covenant, agreement or obligation as to materiality or “Material Adverse Effect” (or words of similar effect) contained therein shall be disregarded.

(c) Any indemnification payment hereunder shall be made by wire transfer of immediately available funds to such account or accounts as the Indemnified Party may designate in writing to the Indemnifying Party at least two (2) Business Days before the date payment of the Taxes to which such payment relates is due, or, if no Tax is payable, within fifteen days after written demand is made for such payment.

(d) An Indemnifying Party shall not be subrogated to any right of action (whether pursuant to contract, arising under applicable Law or otherwise) which the Indemnified Party may have against any other Person with respect to any matter giving rise to a claim for indemnification hereunder.

11.09 Indemnity Treatment . Any amount of indemnification payable pursuant to the provisions of this Article 11 shall, to the extent reasonable under the Tax Laws, be treated as an adjustment to the Purchase Price, unless otherwise directed by a Governmental Authority.

11.10 Mitigation . The amount which an Indemnifying Party is or may be required to pay to an Indemnified Party in respect of damages for which indemnification is provided under this Agreement shall be reduced by any amounts actually received (including amounts received under insurance policies) by or on behalf of any Indemnified Party or its Affiliates from third parties and any Tax benefit to the Indemnified Party or its Affiliates arising in connection with the payment of any such damages (such amounts and benefits are collectively referred to herein as “ Indemnity Reduction Amounts ”). If any Company Entity or Indemnified Party or its Affiliates receives any Indemnity Reduction Amounts in respect of a claim for which indemnification is provided under this Agreement after the full amount of such claim has been paid by an Indemnifying Party or after an Indemnifying Party has made a partial payment of such claim and such Indemnity Reduction Amounts exceed the remaining unpaid balance of such claim, then the Indemnified Party shall promptly remit to the Indemnifying Party an amount equal to the excess (if any) of (i) the amount theretofore paid by the Indemnifying Party in respect of such claim, less (ii) the amount of the indemnity payment that would have been due if such Indemnity Reduction Amounts in respect thereof had been received before the indemnity payment was made. An insurer or other third party who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or, solely by virtue of the indemnification provisions hereof, have any subrogation rights with respect thereto, it being expressly understood and agreed that no insurer or any other third party shall be entitled to any

benefit they would not be entitled to receive in the absence of the indemnification provisions by virtue of the indemnification provisions hereof. Each of Seller and Purchaser, as appropriate, shall, or shall cause each Indemnified Party to, use its commercially reasonable efforts to pursue promptly any claims or rights it may have against all third parties which would reduce the amount of damages for which indemnification is provided under this Agreement and take all commercially reasonable actions to mitigate damages. Tax benefits under this Section 11.10 shall be determined assuming full utilization of any resulting deduction or loss in the Tax period in which the damage is sustained and using the highest combined marginal Tax rate in effect for federal and applicable state, local and foreign income Taxes for such Tax period.

ARTICLE 12

TERMINATION

12.01 Termination . This Agreement may be terminated at any time prior to Closing as follows:

(a) by mutual written consent of Purchaser and Seller;

(b) by either Seller or Purchaser if the Closing has not occurred on or before twelve (12) months after the date of this Agreement (the “ Termination Date ”) and the failure to consummate is not caused by a breach of this Agreement by the terminating party.

(c) by Purchaser if there has been a breach by Seller of any representation, warranty, covenant or agreement contained in this Agreement which (i) would result in a failure of a condition set forth in Section 7.01 or Section 7.02 , and (ii) either (x) is a breach of Seller’s obligations to transfer the Acquired Interests at Closing in accordance with this Agreement or (y) such breach has not been cured within 30 days following written notification thereof; provided , however , that if, at the end of such 30 day period, Seller is endeavoring in good faith, and proceeding diligently, to cure such breach, Seller shall have an additional 30 days in which to effect such cure; and

(d) by Seller if there has been a breach by Purchaser of any representation, warranty, covenant or agreement contained in this Agreement which (i) would result in a failure of a condition set forth in Section 8.01 or Section 8.02 , and (ii) such breach has not been cured within 30 days following written notification thereof; provided , however , that if, at the end of such 30 day period, Purchaser is endeavoring in good faith, and proceeding diligently, to cure such breach, Purchaser shall have an additional 30 days in which to effect such cure.

12.02 Effect of Termination.

(a) If this Agreement is validly terminated pursuant to Section 12.01 , this Agreement will forthwith become null and void, and there will be no liability or obligation on the part of either Seller or Purchaser (or any of their respective Representatives or Affiliates) in respect of this Agreement, except that the applicable portions of Article 1 , this Section 12.02 , and the entirety of Article 11 and Article 13 will continue to apply following any termination; provided , however , that nothing in this Section 12.02 shall release any Party from liability for any breach of this Agreement by such Party prior to the termination of this

Agreement (and any attempted termination by the breaching Party shall be void).

(b) Upon termination of this Agreement by Purchaser or Seller for any reason, all information received by Purchaser with respect to the Company, the Subsidiaries, the assets of the Company, the assets of the Subsidiaries or Seller shall remain subject to the provisions of Section 13.06 and the Confidentiality Agreement.

ARTICLE 13

MISCELLANEOUS

13.01 Notices . All notices, requests and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally, by facsimile transmission, by reputable national overnight courier service or by registered or certified mail (postage prepaid) to the Parties at the following addresses or facsimile numbers, as applicable:



If to Purchaser, to:	Cleco Corporate Holdings LLC
	2030 Donahue Ferry Road
	Pineville, Louisiana 71360-5226
	Attn: General Counsel
	Fax: (318) 484-7777


With a copy to:	Phelps Dunbar, L.L.P.
	365 Canal Street
	Suite 2000
	New Orleans, Louisiana 70130-6534 Attn: James A. Stuckey Fax: (504) 568-9130

If to Seller and the Company, to:	NRG Energy Inc.
	804 Carnegie Center Drive
	Princeton, NJ 08540
	Attn: General Counsel
	Fax: (609) 524-4501

With a copy to:	Jones Day
	51 Louisiana Avenue, NW
	Washington, DC 20001
	Attn: Gerald P. Farano
	Fax: (202) 626-1700

Notices, requests and other communications will be deemed given upon the first to occur of such item having been (a) delivered personally to the address provided in this Section 13.01 , (b) delivered by confirmed facsimile transmission to the facsimile number provided in this Section 13.01 , or (c) delivered by registered or certified mail (postage prepaid) or by reputable national overnight courier service in the manner described above to the address provided in this

Section 13.01 (in each case regardless of whether such notice, request or other communication is received by any other Person to whom a copy of such notice, request or other communication is to be delivered pursuant to this Section 13.01 ). Any Party from time to time may change its address, facsimile number or other information for the purpose of notices to that Party by giving notice specifying such change to the other Party.

13.02 Entire Agreement . This Agreement and the documents referenced herein supersede all prior discussions and agreements, whether oral or written, between the Parties with respect to the subject matter hereof, and contains the entire agreement between the Parties with respect to the subject matter hereof.

13.03 Specific Performance . The Parties agree that if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, irreparable damage would occur and money damages may not be a sufficient remedy. In the event of any breach or threatened breach by the other Party of any covenant or obligation contained in this Agreement, the non-breaching Party shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, without the necessity of posting bonds or similar undertakings in connection therewith, this being in addition to any other remedy which may be available to such non-breaching party at law or in equity, including monetary damages.

13.04 Time of the Essence . Time is of the essence with regard to all duties and time periods set forth in this Agreement.

13.05 Expenses . Except as otherwise expressly provided in this Agreement, whether or not the transactions contemplated hereby are consummated, each Party will pay its own costs and expenses incurred in connection with the negotiation, execution and performance of this Agreement. The parties acknowledge and agree that any filing fees required by FERC or in respect of the HSR Act shall be shared equally by the Parties.

13.06 Public Announcements . None of the Parties nor any of their Affiliates shall make any written or other public disclosure, announcement or other similar statement regarding this Agreement or the transactions contemplated hereby without the prior written consent of the other Party, except as required by Law, any regulatory authority or under the applicable rules and regulations of a stock exchange or market on which the securities of the disclosing Party or any of its affiliates are listed provided , further , that the foregoing shall not restrict disclosures of information made by or on behalf of (i) Seller and/or its Affiliates or successors, or (ii) Purchaser and/or its Affiliates or successors, in each case, to their respective direct and indirect Affiliates, equity holders, partners, members, financing sources, counsel, accountants, consultants and other advisors (so long as, in each case, such disclosure has a valid business purpose and is effected in a manner consistent with customary practices (including with respect to confidentiality)). If any disclosure, announcement or similar statement is required by Law, regulatory authority or rules and regulations of a stock exchange or market, the disclosing Party shall give the non-disclosing Party prior notice of, and a reasonable opportunity to comment promptly on, the proposed disclosure and shall limit such disclosure to such information as reasonably required to comply with such applicable Law, regulatory authority Order or stock exchange or market rules and regulations.

13.07 Waiver . Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition and delivered pursuant to Section 13.01 . No waiver by any Party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion. All remedies, either under this Agreement or by Law or otherwise afforded, will be cumulative and not alternative. The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, or the waiver of the fulfillment of any such condition, shall not affect the right to indemnification or other remedy based on such representation, warranty, covenant or obligation. Notwithstanding anything to the contrary in this Agreement, this sentence of this Section 13.07 , Section 13.08 , Section 13.09 , Section 13.13, Section 13.14 and Section 13.19 may not be waived in a manner materially adverse to the Financing Sources without the prior written consent of the Financing Sources, such consent not to be unreasonably withheld, conditioned or delayed.

13.08 Amendment . This Agreement may be amended, supplemented or modified only by a written instrument duly executed by or on behalf of each Party. Notwithstanding anything to the contrary in this Agreement, Section 13.07 , this sentence of this Section 13.08 , Section 13.07 , Section 13.09 , Section 13.13, Section 13.14 and Section 13.19 may not be amended, supplemented, modified or terminated in a manner materially adverse to the Financing Sources without the prior written consent of the Financing Sources, such consent not to be unreasonably withheld, conditioned or delayed.

13.09 No Third Party Beneficiary . The terms and provisions of this Agreement are intended solely for the benefit of each Party and their respective successors or permitted assigns, and it is not the intention of the Parties to confer third party beneficiary rights upon any other Person other than any Person entitled to indemnity under Article 11 , and the terms and provisions of this Agreement do not confer such beneficiary rights upon any other Person; provided that the Financing Sources shall be intended third party beneficiaries of Section 13.07 , Section 13.08 , this Section 13.09 , Section 13.13 , Section 13.14 and Section 13.19 and shall be entitled to enforce such provisions directly.

13.10 Assignment . The obligations of the Parties under this Agreement are not assignable without the prior written consent of the other Party, which such Party may withhold in its discretion; provided that, Purchaser may assign this Agreement, including the right to purchase the Acquired Interests, without the prior written consent of Seller, to (a) any Affiliate of Purchaser, or (b) any Financing Source providing financing to Purchaser from time to time as collateral security for such financing, in each case so long as Purchaser remains fully liable for its obligations under this Agreement.

13.11 Severability . If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future Law, and if the rights or obligations of any Party under this Agreement shall not be materially and adversely affected thereby, (a) such provision shall be fully severable, (b) this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, and (c) the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the

illegal, invalid or unenforceable provision or by its severance herefrom.

13.12 Governing Law . THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF EXCEPT FOR SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

13.13 Consent to Jurisdiction .

(a) For all purposes of this Agreement, and for all purposes of any Action or Proceeding arising out of or relating to the transactions contemplated hereby or for recognition or enforcement of any judgment, each Party hereto submits to the personal jurisdiction of the courts of the State of New York and the federal courts of the United States sitting in New York County, and hereby irrevocably and unconditionally agrees that any such Action or Proceeding may be heard and determined in such New York court or, to the extent permitted by law, in such federal court. Each Party hereto agrees that a final judgment in any such Action or Proceeding may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by Law. Nothing in this Agreement shall affect any right that any Party may otherwise have to bring any Action or Proceeding relating to this Agreement against the other Party or its properties in the courts of any jurisdiction. Notwithstanding the foregoing and subject to the waivers in Section 13.19 , each Party agrees that it will not, and it will not permit any of its Affiliates or Representatives to, bring or support any Action or Proceeding of any kind or description, whether in law or in equity, whether in contract or tort or otherwise, against the Financing Sources in any way relating to this Agreement, the Debt Financing, the definitive documentation of the Debt Financing or any of the transactions contemplated hereby or thereby, including any dispute arising out of or relating in any way to the Debt Financing or the performance thereof, in any forum other than that courts of the State of New York and the federal courts of the United States sitting in New York County.

(b) Each Party hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so:

(i) any objection which it may now or hereafter have to the laying of venue of any Action or Proceeding arising out of or relating to this Agreement or any related matter in any New York state or federal court located in New York County, and

(ii) the defense of an inconvenient forum to the maintenance of such Action or Proceeding in any such court.

(c) Each Party hereto irrevocably consents to service of process by registered mail, return receipt requested, as provided in Section 13.01. Nothing in this Agreement will affect the right of any Party hereto to serve process in any other manner permitted by Law.

13.14 Waiver of Jury Trial . TO THE FULLEST EXTENT PERMITTED BY LAW, EACH PARTY HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR INTERPRET THE PROVISIONS OF THIS AGREEMENT OR THAT OTHERWISE RELATES TO THIS AGREEMENT (INCLUDING

WITH RESPECT TO THE FINANCING SOURCES, THE DEBT FINANCING AND THE DEFINITIVE DOCUMENTATION FOR THE DEBT FINANCING AND ANY TRANSACTIONS CONTEMPLATED THEREBY).

13.15 Limitation on Certain Damages . NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, NO PARTY SHALL BE LIABLE TO ANY OTHER PARTY FOR ANY CONSEQUENTIAL, SPECIAL, INDIRECT, SPECULATIVE, EXEMPLARY, OR PUNITIVE DAMAGES (COLLECTIVELY, “ CONSEQUENTIAL DAMAGES ”) FOR ANY REASON WITH RESPECT TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT, WHETHER BASED ON STATUTE, CONTRACT, TORT OR OTHERWISE AND WHETHER OR NOT ARISING FROM THE OTHER PARTY’S SOLE, JOINT OR CONCURRENT NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT; PROVIDED, HOWEVER, THAT ANY LOSSES ARISING OUT OF THIRD PARTY CLAIMS FOR WHICH A PARTY IS ENTITLED TO INDEMNIFICATION UNDER THIS AGREEMENT SHALL NOT CONSTITUTE CONSEQUENTIAL DAMAGES. FOR THE AVOIDANCE OF DOUBT, AN ACTION FOR THE PAYMENT OF THE PURCHASE PRICE SHALL NOT BE CONSIDERED CONSEQUENTIAL DAMAGES.

13.16 Disclosures . Any Party may, at its option, include in the Disclosure Schedules items that are not material in order to avoid any misunderstanding, and any such inclusion, or any references to dollar amounts, shall not be deemed to be an acknowledgment or representation that such items are material, to establish any standard of materiality or to define further the meaning of such terms for purposes of this Agreement. In no event shall the inclusion of any matter in the Disclosure Schedules be deemed or interpreted to broaden Seller’s or Purchaser’s representations, warranties, covenants or agreements contained in this Agreement. The mere inclusion of an item in the Disclosure Schedules shall not be deemed an admission by a Party that such item represents a material exception or fact, event, or circumstance.

13.17 Commercially Reasonable Efforts . Subject to the terms and conditions of this Agreement and applicable Law, the Parties shall use their respective commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable Laws and regulations or otherwise to consummate and make effective the transactions contemplated by this Agreement as soon as practicable, including such actions or things as any other Party may reasonably request in order to cause any of the conditions to such other Party’s obligation to consummate such transactions specified in ARTICLE 7 and ARTICLE 8 to be fully satisfied. Purchaser and Purchaser Parent shall not enter into any agreement or complete any transactions that would reasonably be expected to delay, hinder or prohibit the consummation of the transactions contemplated hereby, including causing the failure of the closing conditions set forth in ARTICLE 7 and ARTICLE 8 to be satisfied. Purchaser acknowledges that, for purposes of Section 6.01 only, for purposes of using its “commercially reasonable efforts,” Purchaser shall, and shall cause Purchaser Parent and its and Purchaser Parent’s respective directors, officers, employees, agents, attorneys, accountants and representatives to consult (subject to Section 6.01(e) and Section 6.01(f) above) and fully cooperate with and provide reasonable assistance to Seller in (a) obtaining all necessary Consents or other permission or action by, and giving all necessary notices to and making all necessary filings with and applications and submissions to, any Governmental Authority or other Person, (b) defending against all Actions or Proceedings challenging this Agreement or the

consummation of the transactions contemplated hereby, (c) lifting any permanent or preliminary injunction or restraining order or other similar order issued or entered by any court or Governmental Authority (an “ Injunction ”) of any type referred to in Section 7.03 and Section 7.09 in general, provided , that Purchaser shall not be required to seek rehearing of or appeal any ruling of the LPSC or FERC, and (d) consummating and making effective the transactions contemplated hereby

13.18 Counterparts . This Agreement may be executed by any number of counterparts (including by facsimile, PDF or other electronic transmission), each of which will be deemed an original, but all of which together will constitute one and the same instrument.

13.19 Limitation on Liability; Waiver of Claims . Notwithstanding anything to the contrary contained herein, Seller (on behalf of itself and any of its Affiliates and Representatives) hereby waives any rights or claims against any Financing Source in connection with this Agreement, the Debt Financing, the definitive documentation of the Debt Financing or in respect of any other document or theory of law or equity (whether in tort, contract or otherwise) or in respect of any oral or written representations made or alleged to be made in connection herewith or therewith and Seller (on behalf of itself and any of its Affiliates and Representatives) agrees not to commence any Action or Proceeding against any Financing Source in connection with this Agreement, the Debt Financing, the definitive documentation of the Debt Financing or in respect of any other document or theory of law or equity and agrees to cause any such Action or Proceeding asserted by Seller (on behalf of itself and any of its Affiliates and Representatives) or any of its Affiliates or Representatives in connection with this Agreement, the Debt Financing, the definitive documentation of the Debt Financing or in respect of any other document or theory of law or equity against any Financing Source to be dismissed or otherwise terminated. In furtherance and not in limitation of the foregoing waiver, it is acknowledged and agreed that no Financing Source shall have any liability for any claims or damages to Seller or any of its Affiliates or Representatives in connection with this Agreement, the Debt Financing, the definitive documentation of the Debt Financing or the transactions contemplated hereby or thereby. This Section 13.19 is intended to benefit and may be enforced by the Financing Sources and shall be binding on all successors and assigns of Seller and its Affiliates.

[ Signature page to follow ]

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized representative of each Party as of the date first above written.

“ Purchaser ”

CLECO ENERGY LLC,

a Louisiana limited liability company

/s/ William G. Fontenot

By: William G. Fontenot

Title: Manager

“ Seller ”

NRG ENERGY, INC.,

a Delaware corporation

/s/ Bruce Chung

By: Bruce Chung

Title: Sr. Vice President

“ Company ”

NRG South Central Generating LLC,

a Delaware limited liability company

/s/ Gaetan Frotte

By: Gaetan Frotte

Title: Treasurer

Signature Page to Purchase and Sale Agreement



CLECO CORPORATE HOLDINGS LLC	EXHIBIT 12(a)



Computation of Ratios of Earnings to Fixed Charges (Unaudited)
	SUCCESSOR ⁽¹⁾									PREDECESSOR ⁽²⁾
(THOUSANDS, EXCEPT RATIOS)	FOR THE THREE MONTHS ENDED MAR. 31, 2018			FOR THE TWELVE MONTHS ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016			FOR THE TWELVE MONTHS ENDED DEC. 31, 2015			FOR THE TWELVE MONTHS ENDED DEC. 31, 2014
Net income (loss)	$	10,861		$	138,080		$	(24,113	)	$	(3,960	)	$	133,669		$	154,739
Income tax expense (benefit)	2,862			7,079			(22,822		)	3,468			77,704			67,116
Undistributed equity loss from investees	—			—			—			—			7			—
Amortization of capitalized interest	—			—			—			—			—			77
Total fixed charges (from below)	32,287			126,303			91,338			22,547			79,795			76,163
Total earnings	$	46,010		$	271,462		$	44,403		$	22,055		$	291,175		$	298,095
Fixed charges
Interest	$	30,537		$	118,775		$	87,315		$	21,491		$	75,535		$	71,959
Amortization of debt expense, premium, net	1,493			6,425			3,537			839			3,342			3,227
Portion of rentals representative of an interest factor ⁽³⁾	257			1,062			362			146			572			489
Interest of capitalized lease	—			41			124			71			346			488
Total fixed charges	$	32,287		$	126,303		$	91,338		$	22,547		$	79,795		$	76,163
Ratio of earnings to fixed charges	1.43		x	2.15		x	⁽⁴⁾			⁽⁴⁾			3.65		x	3.91		x
⁽¹⁾ Successor is the post-merger activity of Cleco. Cleco has accounted for the Merger transaction by applying the acquisition method of accounting. The successor period is not comparable to the predecessor period. ⁽²⁾ Predecessor is the pre-merger activity of Cleco. Cleco has accounted for the Merger transaction by applying the acquisition method of accounting. The predecessor period is not comparable to the successor period. ⁽³⁾ Interest portion of rental expenses, that cannot be imputed, is estimated to equal 11% of such expense, and the imputed interest portion of rental expenses is calculated between 3.62% and 6.08% of such expenses, which are considered reasonable approximations of the interest factors. ⁽⁴⁾ Earnings were inadequate to cover fixed charges. The earnings did not cover the fixed charges by $46.9 million and $0.5 million for the successor period April 13, 2016, through December 31, 2016, and the predecessor period January 1, 2016, through April 12, 2016, respectively.



CLECO POWER LLC	EXHIBIT 12(b)



Computation of Ratios of Earnings to Fixed Charges (Unaudited)
(THOUSANDS, EXCEPT RATIOS)	FOR THE THREE MONTHS ENDED MAR. 31, 2018			FOR THE TWELVE MONTHS ENDED DEC. 31, 2017			FOR THE TWELVE MONTHS ENDED DEC. 31, 2016			FOR THE TWELVE MONTHS ENDED DEC. 31, 2015			FOR THE TWELVE MONTHS ENDED DEC. 31, 2014
Net income	$	26,004		$	150,738		$	39,128		$	141,350		$	154,316
Income tax expense	7,997			67,331			18,369			79,294			76,974
Total fixed charges (from below)	18,786			72,752			78,442			78,364			77,230
Total earnings	$	52,787		$	290,821		$	135,939		$	299,008		$	308,520
Fixed charges
Interest	$	17,355		$	66,491		$	74,450		$	74,394		$	73,140
Amortization of debt expense, premium, net	1,174			5,158			3,289			3,052			3,113
Portion of rentals representative of an interest factor*	257			1,062			508			572			489
Interest of capitalized lease	—			41			195			346			488
Total fixed charges	$	18,786		$	72,752		$	78,442		$	78,364		$	77,230
Ratio of earnings to fixed charges	2.81		x	4.00		x	1.73		x	3.82		x	3.99		x
* Interest portion of rental expenses, that cannot be imputed, is estimated to equal 11% of such expense, and the imputed interest portion of rental expenses is calculated between 3.62% and 6.08% of such expenses, which are considered reasonable approximations of the interest factors.



CLECO CORPORATE HOLDINGS LLC	EXHIBIT 31.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES−OXLEY ACT OF 2002

I, William G. Fontenot, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2018 , of Cleco Corporate Holdings LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	May 2, 2018



/s/ William G. Fontenot
William G. Fontenot President and Chief Executive Officer



CLECO CORPORATE HOLDINGS LLC	EXHIBIT 31.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES−OXLEY ACT OF 2002

I, Terry L. Taylor, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2018 , of Cleco Corporate Holdings LLC;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	May 2, 2018



/s/ Terry L. Taylor
Terry L. Taylor Chief Financial Officer



CLECO POWER LLC	EXHIBIT 31.3

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES−OXLEY ACT OF 2002

I, William G. Fontenot, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2018 , of Cleco Power LLC;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	May 2, 2018



/s/ William G. Fontenot
William G. Fontenot President and Chief Executive Officer



CLECO POWER LLC	EXHIBIT 31.4

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES−OXLEY ACT OF 2002

I, Terry L. Taylor, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2018 , of Cleco Power LLC;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	May 2, 2018



/s/ Terry L. Taylor
Terry L. Taylor Chief Financial Officer



CLECO CORPORATE HOLDINGS LLC	EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Cleco Corporate Holdings LLC (the “Company”) on Form 10-Q for the quarter ended March 31, 2018 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William G. Fontenot, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date:	May 2, 2018



/s/ William G. Fontenot
William G. Fontenot President and Chief Executive Officer



CLECO CORPORATE HOLDINGS LLC	EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Cleco Corporate Holdings LLC (the “Company”) on Form 10-Q for the quarter ended March 31, 2018 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Terry L. Taylor, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date:	May 2, 2018



/s/ Terry L. Taylor
Terry L. Taylor Chief Financial Officer



CLECO POWER LLC	EXHIBIT 32.3

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Cleco Power LLC (the “Company”) on Form 10-Q for the quarter ended March 31, 2018 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William G. Fontenot, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date:	May 2, 2018



/s/ William G. Fontenot
William G. Fontenot President and Chief Executive Officer



CLECO POWER LLC	EXHIBIT 32.4

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Cleco Power LLC (the “Company”) on Form 10-Q for the quarter ended March 31, 2018 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Terry L. Taylor, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date:	May 2, 2018



/s/ Terry L. Taylor
Terry L. Taylor Chief Financial Officer



CLECO CORPORATE HOLDINGS LLC
CLECO POWER LLC	EXHIBIT 95

MINE SAFETY DISCLOSURES

Cleco Power does not have control over the day-to-day operations, including safety, of either the Dolet Hills Mine or the Oxbow Mine. Pursuant to a mining joint operating agreement governing the mines, Cleco Power and SWEPCO each have two representatives on a four member executive committee. The main purpose of the executive committee is to enhance communication among the mine operator, Cleco Power, and SWEPCO. The executive committee’s duties include: reviewing the status of the mine; providing policy recommendations concerning basic planning, land acquisition, geological and engineering activities; recommending economic limits and personnel requirements; reviewing mining and lignite delivery issues; and reviewing the financial information and operational records of DHLC.

Under Section 1503 of the Dodd-Frank Act, public reporting companies that meet the definition of an “operator” of a mine under the Federal Mine Safety and Health Act of 1977 (Mine Act) as administered by the Mine Safety and Health Administration (MSHA) are required to report notices of violations and proposed assessments of violations of MSHA regulations promulgated in support of the Mine Act. The MSHA defines an operator as any owner, lessee, or other person who operates, controls, or supervises a coal or other mine or any independent contractor performing services or construction at such mine. Cleco Power might meet the definition of an “operator” under the Mine Act through its two representatives on the executive committee. Therefore, Cleco Power has chosen to include the disclosures required by Section 1503 of the Dodd-Frank Act.

During the first quarter of 2018, DHLC was issued nine safety citations by MSHA. While four of the citations were classified as non Significant and Substantial and are not subject to MSHA’s reporting requirements, the other five were classified as Significant and Substantial. Five of the nine safety citations were assessed by MSHA and paid during the first quarter of 2018. These amounts were considered immaterial.

The MSHA definition of control is not the same as the definition of control pursuant to accounting pronouncements relating to consolidation and equity method investments. Management has determined that its relationship with DHLC does not meet the definition of control under authoritative guidance; therefore, Cleco Power has not included any financial information about DHLC in its periodic reports.