Cleco Power's Formula Rate Plan extension approval strikes a balance for customers and company
Reduces customer base rates by $34 million
Provides clarity for future growth
PINEVILLE, LA. - Cleco Power, the regulated electric utility subsidiary of Cleco Corporation (NYSE: CNL), today announced that the Louisiana Public Service Commission (LPSC) has voted to approve its Formula Rate Plan (FRP) extension, reducing base rates for customers by $34 million and providing a mechanism to fund future growth transactions for the utility.
The approval extends Cleco Power's current formula rate plan for four years and provides an annual decrease of $84 for an average residential customer bill. In addition, customers will receive a one-time refund of $22 million as the company transitions from its existing rate plan to the new plan. The refund which equates to approximately $46 for an average residential customer will be included on September bills. The new plan also provides for the rate treatment of Coughlin Power Station. Coughlin recently became a part of the utility's regulated fleet as the winning bid in Cleco Power's 2012 request for proposals for additional capacity.
"As other utilities are asking for rate increases, we are providing a rate decrease to customers," said Darren Olagues, president of Cleco Power. "Cleco Power has strategically added to its generation fleet over the past few years. Now, our goal is to capitalize on our diverse generation fleet to help grow our company. This rate plan extension gives clarity on the treatment of our wholesale contracts, and it maintains a balanced approach for our customers and shareholders."
Cleco Power's rate extension retains many of the features of its former rate plan, including revenue sharing bands, financial structure and the ability to add LPSC-approved projects to the rate structure. The company also will earn a return that supports continued investment, maintaining wholesale growth that mitigates cost increases for its retail customers and allows the company to competitively pursue its growth strategy.
"Our return on equity offers a solid yield on our recent years' investments and supports our utility's financial and operational needs," said Olagues. "With the completion of this initiative, we continue to focus on expanding our company with transactions that meet our risk profile and bring value to all of our stakeholders."
Cleco Power filed for an extension to its existing FRP in April 2013. The original rate plan began in February 2010 and set a four-year rate structure for the company. The newly approved rate plan extension begins July 1, 2014.