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**UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D. C.  20549FORM 10-Q****[X] QUARTERLY REPORT PURSUANT TO SECTION 13OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934****For the quarterly periodended  June 30, 2003**

Or**[  ] TRANSITION REPORT PURSUANTTO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934**

Commission filenumber 1-15759

**CLECO CORPORATION**(Exact name of registrantas 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 registrantas 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 Cleco Corporation is an  accelerated filer (as defined in Rule 12b-2 of the Exchange Act)                                                                                                                                                                                                                                           |
| Yes  x      No ____                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                    |
| Indicate by check mark whether Cleco Power LLC is an  accelerated filer (as defined in Rule 12b-2 of the Exchange Act)                                                                                                                                                                                                                                             |
| Yes ____     No  x                                                                                                                                                                                                                                                                                                                   |

| Indicate the number of shares outstanding of each of the  issuer's classes of Common Stock, as of the latest practicable date. |
|--------------------------------------------------------------------------------------------------------------------------------|
| Registrant                                                                                                                     | Descriptionof Class | Shares Outstandingat  July 31, 2003 |
| Cleco Corporation                                                                                                              | Common Stock,  $1.00 Par Value | 47,271,848 |

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

 

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| **TABLE OF CONTENTS** |
|-----------------------|
|                       | Page |
| ** **            | GLOSSARY OF TERMS | 2 |
| ** **            |   |  |
| ** **            | DISCLOSURE REGARDING FORWARD-LOOKING  STATEMENTS | 4 |
|                       |  |  |
| **PART I**            | FINANCIAL INFORMATION |  |
|                       |  |  |
| **ITEM 1**            | FINANCIAL  STATEMENTS | 6 |
|                       | CLECO CORPORATION  - Consolidated Financial Statements | 7 |
|                       | CLECO  CORPORATION- Management's Discussion  and Analysis of Results of   Operations | 14 |
|                       | CLECO  POWER LLC - Financial Statements | 30 |
|                       | CLECO  POWER LLC - Narrative Analysis of  Results of Operations | 36 |
|                       | NOTES  TO THE FINANCIAL STATEMENTS | 37 |
|                       |  |  |
| **ITEM 2**            | MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL      CONDITION AND  RESULTS OF OPERATIONS | 52 |
|                       |  |  |
| **ITEM 3**            | QUANTITATIVE AND QUALITATIVE DISCLOSURES  ABOUT      MARKET RISK OF  CLECO CORPORATION. | 60 |
|                       |  |  |
| **ITEM 4**            | CONTROLS  AND PROCEDURES | 63 |
|                       |  |  |
|                       |  |  |
| **PART II**           | OTHER INFORMATION |  |
|                       |  |  |
| **ITEM 1**            | LEGAL PROCEEDINGS | 64 |
| ** **            | ** ** |  |
| **ITEM 3**            | DEFAULTS UPON SENIOR  SECURITIES | 64 |
| ** **            | ** ** |  |
| **ITEM 4**            | SUBMISSION OF MATTERS TO A VOTE OF SECURITY  HOLDERS | 64 |
| ** **            | ** ** |  |
| **ITEM 5**            | OTHER INFORMATION | 64 |
| ** **            | ** ** |  |
| **ITEM 6**            | EXHIBITS AND REPORTS ON FORM 8-K | 65 |
|                       |  |  |
|                       |  |  |
| ** **            | SIGNATURES | 67 |

****1

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**GLOSSARY OF TERMS**

          References in thisfiling to "Cleco" mean Cleco Corporation and its subsidiaries, including ClecoPower LLC, and references to "Cleco Power" mean Cleco Power LLC, unless thecontext clearly indicates otherwise.  Additional abbreviations oracronyms used in this filing are defined below:

| **Abbreviation or Acronym** | **Definition**                                                                                                                                                                                                        |
|-----------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Acadia                      | Acadia Power Partners LLC and its 1,160-MW combined-cycle, natural  gas-fired       power plant near Eunice, Louisiana, 50% owned by Midstream  and 50% owned      by Calpine |
| APB                         | Accounting Principles Board                                                                                                                                                                                           |
| APB No. 18                  | APB Opinion No. 18 - The Equity Method of Accounting for Investments  in      Common Stock                                                                                                        |
| APB No. 25                  | APB Opinion No. 25 - Accounting for Stock Issued to Employees                                                                                                                                                         |
| APH                         | Acadia Power Holdings  LLC, a wholly owned subsidiary of Midstream                                                                                                                                                    |
| Aquila Energy               | Aquila Energy Marketing Corporation                                                                                                                                                                                   |
| Calpine                     | Calpine Corporation                                                                                                                                                                                                   |
| CFTC                        | Commodity Futures  Trading Commission                                                                                                                                                                                 |
| Cleco                       | Cleco Corporation and its subsidiaries, including Cleco Power LLC                                                                                                                                                     |
| Cleco Energy                | Cleco Energy LLC, a wholly owned subsidiary of Midstream                                                                                                                                                              |
| Cleco Power                 | Cleco Power LLC, a wholly owned subsidiary of Cleco                                                                                                                                                                   |
| Consent Agreement           | Stipulation and Consent Agreement, dated as of July 25, 2003, between Cleco      and the FERC Staff                                                                                               |
| DIG                         | Derivatives Implementation Group                                                                                                                                                                                      |
| Dynegy                      | Dynegy Power Marketing, Inc.                                                                                                                                                                                          |
| EITF                        | Emerging Issues Task Force of the FASB                                                                                                                                                                                |
| EITF No. 02-3               | Accounting for Contracts Involved in Energy Trading and Risk Management      Activities                                                                                                           |
| EITF No. 98-10              | Accounting for Contracts Involved in Energy Trading and Risk Management      Activities                                                                                                           |
| ESPP                        | Employee Stock Purchase Plan                                                                                                                                                                                          |
| Entergy                     | Entergy Corporation                                                                                                                                                                                                   |
| EPA                         | Environmental Protection Agency                                                                                                                                                                                       |
| Evangeline                  | Cleco Evangeline LLC, a wholly owned subsidiary of Midstream, and its 775-MW,        natural gas-fired  power plant located in Evangeline Parish, Louisiana                                       |
| FASB                        | Financial Accounting Standards Board                                                                                                                                                                                  |
| FERC                        | Federal Energy Regulatory Commission                                                                                                                                                                                  |
| FIN                         | FASB Interpretation No.                                                                                                                                                                                               |
| FIN 45                      | Guarantor's Accounting and Disclosure Requirements for Guarantees,  Including      Indirect Guarantees of Indebtedness to Others                                                                  |
| FIN 46                      | Consolidation of Variable Interest Entities an Interpretation of  Accounting      Research Bulletin No. 51                                                                                        |
| Hudson                      | Hudson SVD LLC                                                                                                                                                                                                        |
| KBC                         | KBC Bank N.V.                                                                                                                                                                                                         |
| kW                          | Kilowatt                                                                                                                                                                                                              |
| kWh                         | Kilowatt-hour                                                                                                                                                                                                         |
| LIBOR                       | London Inter-Bank Offer Rate                                                                                                                                                                                          |
| LPSC                        | Louisiana Public Service Commission                                                                                                                                                                                   |
| LTICP                       | Long-Term Incentive Compensation Plan                                                                                                                                                                                 |
| LTP Agreement               | Long-term program parts, shop repairs, and scheduled outage services contract      between Evangeline and Siemens Westinghouse Power  Corporation                                                 |
| MACT                        | Maximum Achievable Control Technology                                                                                                                                                                                 |
| Marketing & Trading     | Cleco Marketing & Trading LLC, a wholly owned subsidiary of  Midstream                                                                                                                                            |
| MAEM                        | Mirant Americas Energy Marketing, LP, a wholly owned subsidiary of Mirant                                                                                                                                             |
| MAI                         | Mirant Americas, Inc., a wholly owned subsidiary of Mirant                                                                                                                                                            |

2

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| Midstream                    | Cleco Midstream Resources LLC, a wholly owned subsidiary of Cleco                                                                                                                                                                                      |
|------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Mirant                       | Mirant Corporation                                                                                                                                                                                                                                     |
| MMBtu                        | Million British thermal units                                                                                                                                                                                                                          |
| MW                           | Megawatt                                                                                                                                                                                                                                               |
| NOAA                         | National Oceanic and Atmospheric Administration                                                                                                                                                                                                        |
| Not meaningful               | A percentage comparison of these items is not statistically meaningful  either       because the percentage difference is greater than  1,000% or the comparison      involves a positive and negative number. |
| Operating Agreement          | Operating Agreement of Cleco Power LLC, dated December 13, 2000, amended      April 26, 2002                                                                                                                                       |
| PEH                          | Perryville Energy Holdings LLC                                                                                                                                                                                                                         |
| Perryville                   | Perryville Energy Partners, L.L.C., a wholly owned subsidiary of Midstream,      and its 725-MW combined-cycle, natural gas-fired  power plant near      Perryville, Louisiana                                 |
| Perryville Tolling Agreement | Capacity Sale and Tolling Agreement between Perryville and MAEM                                                                                                                                                                                        |
| PUHCA                        | Public Utility Holding  Company Act of 1935                                                                                                                                                                                                            |
| Quanta                       | Quanta Services, Inc.                                                                                                                                                                                                                                  |
| Registrant(s)                | Cleco and Cleco Power                                                                                                                                                                                                                                  |
| RFP                          | Request for Proposal                                                                                                                                                                                                                                   |
| RTO                          | Regional Transmission Organization                                                                                                                                                                                                                     |
| SEC                          | Securities and Exchange  Commission                                                                                                                                                                                                                    |
| Senior Loan Agreement        | Construction and Term Loan Agreement, dated as of June 7, 2001, between       Perryville and KBC, as Agent Bank                                                                                                                    |
| SERC                         | Southeastern Electric Reliability Council                                                                                                                                                                                                              |
| SFAS                         | Statement of Financial Accounting Standards                                                                                                                                                                                                            |
| SFAS No. 58                  | Capitalization of Interest Cost in Financial Statements That Include      Investments Accounted for by the Equity Method                                                                                                           |
| SFAS No. 71                  | Accounting for the Effects of Certain Types of Regulation                                                                                                                                                                                              |
| SFAS No. 109                 | Accounting for Income Taxes                                                                                                                                                                                                                            |
| SFAS No. 123                 | Accounting for Stock-Based Compensation                                                                                                                                                                                                                |
| SFAS No. 131                 | Disclosures about Segments of an Enterprise and Related Information                                                                                                                                                                                    |
| SFAS No. 133                 | Accounting for Derivative Instruments and Hedging Activities                                                                                                                                                                                           |
| SFAS No. 143                 | Accounting for Asset Retirement Obligations                                                                                                                                                                                                            |
| SFAS No. 144                 | Accounting for the Impairment or Disposal of Long-Lived Assets                                                                                                                                                                                         |
| SFAS No. 149                 | Amendment of Statement 133 on Derivative Instruments and Hedging Activities.                                                                                                                                                                           |
| SFAS No. 150                 | Accounting for Certain Financial Instruments with Characteristics of  both       Liabilities and Equity                                                                                                                            |
| SMD                          | Standard market design                                                                                                                                                                                                                                 |
| Subordinated Loan  Agreement | Subordinated Loan  Agreement, dated as of August 23, 2002, between      Perryville and MAI                                                                                                                                         |
| SWEPCO                       | Southwestern Electric Power Company                                                                                                                                                                                                                    |
| Termination Agreement        | Termination Agreement, dated as of May 2, 2003, between  Perryville, PEH, Cleco,      MAEM, MAI, and Mirant                                                                                                                        |
| UtiliTech.                   | Utility Construction & Technology Solutions LLC                                                                                                                                                                                                    |
| UTS.                         | UTS, LLC (successor entity to UtiliTech)                                                                                                                                                                                                               |
| VAR                          | Value-at-risk                                                                                                                                                                                                                                          |
| Westar                       | Westar Energy, Inc., a Kansas Corporation                                                                                                                                                                                                              |
| Williams Energy              | Williams Energy Marketing & Trading Company                                                                                                                                                                                                        |

3

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**DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS**

          This reportincludes "forward-looking statements" within the meaning of Section 27A of theSecurities Act of 1933, as amended, and Section 21E of the Securities ExchangeAct of 1934, as amended.  All statements other than statements ofhistorical fact included in this report are forward-lookingstatements.  Although the Registrants believe that the expectationsreflected in such forward-looking statements are reasonable, such forward-lookingstatements are based on numerous assumptions (some of which may prove to beincorrect) and are subject to risks and uncertainties that could cause theactual results to differ materially from the Registrants'expectations.  In addition to any assumptions and other factorsreferred to specifically in connection with these forward-looking statements,the following list identifies some of the factors that could cause theRegistrants' actual results to differ materially from those contemplated in anyof the Registrants' forward-looking statements:

| -   | Factors affecting utility operations such as unusual  weather conditions or other natural phenomena; catastrophic weather-related  damage; unscheduled generation outages; unusual maintenance or repairs; unanticipated  changes to fuel costs, gas supply costs or availability constraints due to  higher demand, shortages, transportation problems or other developments;  environmental incidents; or power transmission or gas pipeline system  constraints;  |
|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| -   | Impact of the bankruptcy of Mirant on the Perryville  Tolling Agreement, the possible sale of Perryville to an Entergy subsidiary  and Perryville's debt;                                                                                                                                                                                                                                                                                                            |
| -   | Nonperformance by and creditworthiness of counterparties  under tolling and power purchase agreements and trading arrangements, or the  restructuring of those agreements and arrangements, including possible  termination;                                                                                                                                                                                                                                         |
| -   | Increased competition in the power environment, including  effects of industry restructuring or deregulation, transmission system  operation or administration, retail wheeling, or cogeneration;                                                                                                                                                                                                                                                                    |
| -   | Regulatory factors such as unanticipated changes in  rate-setting policies or procedures, recovery of investments made under  traditional regulation, the frequency and timing of rate increases, the  results of periodic fuel audits, the results of RFPs, and the formation of RTOs  and the implementation of SMD;                                                                                                                                               |
| -   | Financial or regulatory accounting principles or policies  imposed by the FASB, the SEC, the Public Company Accounting Oversight Board,  the FERC, the LPSC or similar entities with regulatory or accounting  oversight;                                                                                                                                                                                                                                            |
| -   | Economic conditions, including inflation rates and  monetary fluctuations;                                                                                                                                                                                                                                                                                                                                                                                                |
| -   | Credit ratings of Cleco  Corporation, Cleco Power and Evangeline;                                                                                                                                                                                                                                                                                                                                                                                                         |
| -   | Changing market conditions and a variety of other factors  associated with physical energy and financial trading activities, including,  but not limited to, price, basis, credit, liquidity, volatility, capacity,  transmission, interest rate and warranty risks;                                                                                                                                                                                                 |
| -   | Acts of terrorism;                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| -   | Availability or cost of capital resulting from changes in Cleco or Cleco Power, interest rates, and  securities ratings or market perceptions of the electric utility industry and  energy related industries;                                                                                                                                                                                                                                                       |
| -   | Employee work force factors, including changes in key  executives and work stoppages;                                                                                                                                                                                                                                                                                                                                                                                |
| -   | Legal and regulatory delays and other obstacles associated  with mergers, acquisitions, capital projects, reorganizations, or investments  in joint ventures;                                                                                                                                                                                                                                                                                                        |
| -   | Costs and other effects of legal and administrative  proceedings, settlements, investigations, claims and other matters; and                                                                                                                                                                                                                                                                                                                                         |
| -   | Changes in federal, state, or local legislative  requirements, such as changes in tax laws or rates, regulating policies or  environmental laws and regulations.                                                                                                                                                                                                                                                                                                          |

4

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          All subsequentwritten and oral forward-looking statements attributable to the Registrants or persons acting on their behalfare expressly qualified in their entirety by the factors identified above.

         The Registrants undertake no obligation to update orrevise any forward-looking statements, whether as a result of changes in actualresults, changes in assumptions, or other factors affecting such statements. 

5

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**CLECO CORPORATIONPART I - FINANCIAL INFORMATION**

**ITEM 1          ****FINANCIALSTATEMENTS**

          Theconsolidated financial statements of Cleco have been prepared pursuant to therules and regulations of the SEC.  Certain information and notedisclosures normally included in financial statements prepared in accordancewith accounting principles generally accepted in the United States of Americahave been condensed or omitted pursuant to such rules and regulations, althoughCleco believes that the disclosures are adequate to make the informationpresented not misleading.  These consolidated financial statementsshould be read in conjunction with Cleco's Consolidated Financial Statementsand the Notes included in the Registrants' Combined Annual Report on Form 10-Kfor the year ended December 31, 2002.

          The unauditedfinancial information included in the following financial statements reflectsall adjustments of a normal recurring nature which are, in the opinion ofmanagement of Cleco, necessary for a fair presentation of the financialposition and the results of operations for the interimperiods.  Information for interim periods is affected by seasonalvariations in sales, rate changes, timing of fuel expense recovery and otherfactors, and is not necessarily indicative of the results that may be expectedfor the full fiscal year.

6

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|                                                                                                            |                                                             |                                                    |                                       |                                                   |               |         |
|------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------|----------------------------------------------------|---------------------------------------|---------------------------------------------------|---------------|---------|
| **CLECO CORPORATION  CONSOLIDATED STATEMENTS OF INCOME  For the three months ended June 30,  (UNAUDITED)** |
|                                                                                                            |                                                             |                                                    |                                       | **2003**                                          |               | 2002    |
|                                                                                                            |                                                             |                                                    |                                       | (Thousands, except  share and  per share amounts) |
| **Operating revenue**                                                                                      | ** **                                                  |                                                    |                                       |
|                                                                                                            | Electric operations                                         | **$     171,267 **   |                                       | $  141,322                         |
|                                                                                                            | Tolling operations                                          | **28,032 **                                   |                                       | 13,874                                       |
|                                                                                                            | Energy trading, net                                         | **(78)**                                           |                                       | 2,788                                        |
|                                                                                                            | Energy operations                                           | **19,360 **                                   |                                       | 7,007                                        |
|                                                                                                            | Other operations                                            | **7,955 **                                    |                                       | 10,376                                       |
|                                                                                                            |                                                             | Gross operating revenue                            | **226,536 **                     |                                                   | 175,367  |
|                                                                                                            |                                                             |                                                    | Electric customer  credits            | **(8,500)**                                       |               | (1,225) |
|                                                                                                            |                                                             | Total operating revenue                            | **218,036 **                     |                                                   | 174,142  |
| **Operating expenses**                                                                                     | ** **                                                  |                                                    |                                       |
|                                                                                                            | Fuel used for electric  generation                          | **36,793 **                                   |                                       | 30,104                                       |
|                                                                                                            | Power purchased for  utility customers                      | **57,831 **                                   |                                       | 37,738                                       |
|                                                                                                            | Purchases for energy  operations                            | **18,124 **                                   |                                       | 5,484                                        |
|                                                                                                            | Other operations                                            | **27,126 **                                   |                                       | 25,226                                       |
|                                                                                                            | Maintenance                                                 | **10,892 **                                   |                                       | 11,424                                       |
|                                                                                                            | Depreciation                                                | **18,426 **                                   |                                       | 15,696                                       |
|                                                                                                            | Impairment of  long-lived assets                            | **134,773 **                                  |                                       | -                                            |
|                                                                                                            | Taxes other than income  taxes                              | **9,919 **                                    |                                       | 9,741                                        |
|                                                                                                            |                                                             | Total operating  expenses                          | **313,884 **                     |                                                   | 135,413  |
| **Operating income  (loss)**                                                                               | **(95,848)**                                                |                                                    | 38,729                           |
| Interest income                                                                                            | **721 **                                               |                                                    | 304                              |
| Allowance for other  funds used during construction                                                        | **717 **                                               |                                                    | 512                              |
| Equity income from  investees                                                                              | **7,787 **                                             |                                                    | 788                              |
| Other expense, net                                                                                         | **(2,181)**                                                 |                                                    | (219)                                 |
| Income (loss) before  interest charges                                                                     | **(88,804)**                                                |                                                    | 40,114                           |
| **Interest charges**                                                                                       | ** **                                                  |                                                    |                                       |
|                                                                                                            | Interest charges,  including amortization of debt expenses, | ** **                                         |                                       |                                                   |
|                                                                                                            |                                                             | premium and discount,  net of capitalized interest | **18,473 **                      |                                                   | 13,033   |
|                                                                                                            | Allowance for borrowed  funds used during construction      | **(151)**                                          |                                       | (265)                                             |
|                                                                                                            |                                                             | Total interest charges                             | **18,322 **                      |                                                   | 12,768   |
|                                                                                                            |                                                             |                                                    |                                       | ** **                                        |               |         |
| **Net income (loss)  before income taxes and preferred dividends**                                         | **(107,126)**                                               |                                                    | 27,346                           |
| ** **                                                                                                 | ** **                                                  |                                                    |                                       | ** **                                        |               |         |
| Federal and state  income taxes (benefit)expense                                                           | **(40,725)**                                                |                                                    | 9,564                            |
|                                                                                                            |                                                             |                                                    |                                       | ** **                                        |               |         |
| **Net income (loss)  before preferred dividends**                                                          | **(66,401)**                                                |                                                    | 17,782                           |
| Preferred dividends  requirements, net                                                                     | **457 **                                               |                                                    | 465                              |
|                                                                                                            |                                                             |                                                    |                                       | ** **                                        |               |         |
| **Net income (loss)  applicable to common stock**                                                          | **$     (66,858)**                 |                                                    | $    17,317  |
| ** **                                                                                                 |                                                             |                                                    |                                       | ** **                                        |               |         |
| *The accompanying notes are an integral  part of the consolidated financial statements.*                   | * *                                                    |

7

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| ** **                                                                                                             |                                                                                                            |                                                                                                       |                                                                          |                                                                                     |                              |      |
|------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------|-------------------------------------------------------------------------------------|------------------------------|------|
| **CLECO CORPORATION  CONSOLIDATED STATEMENTS OF INCOME (Continued)  For the three months ended June 30,  (UNAUDITED)** |
| ** **                                                                                                             |                                                                                                            |                                                                                                       |                                                                          | **2003**                                                                            |                              | 2002 |
| ** **                                                                                                             |                                                                                                            |                                                                                                       |                                                                          | (Thousands, except  share and  per share amounts)                                   |
| ** **                                                                                                             |                                                                                                            |                                                                                                       |                                                                          |                                                                                     |                              |      |
| **Average shares of  common stock outstanding**                                                                        |                                                                                                            |                                                                                                       |                                                                          |
|                                                                                                                        | Basic                                                                                                      |                                                                                                       | **47,225,304   **                                         |                                                                                     | 46,025,014    |
|                                                                                                                        | Diluted                                                                                                    | **47,225,304   **                                                                      |                                                                          | 48,746,034                                                           |
|                                                                                                                        |                                                                                                            |                                                                                                       |                                                                          | ** **                                                                          |                              |      |
| **Basic earnings per  share**                                                                                          | ** **                                                                                                 |                                                                                                       |                                                                          |
|                                                                                                                        | Net income (loss)  applicable to common stock                                                              | **$             (1.42)  ** |                                                                          | $          0.38    |
|                                                                                                                        |                                                                                                            |                                                                                                       |                                                                          | ** **                                                                          |                              |      |
| **Diluted earnings per  share**                                                                                        | ** **                                                                                                 |                                                                                                       |                                                                          |
|                                                                                                                        | Net income (loss)  applicable to common stock                                                              | **$             (1.42)  ** |                                                                          | $          0.36    |
|                                                                                                                        |                                                                                                            |                                                                                                       |                                                                          | ** **                                                                          |                              |      |
| **Cash dividends paid  per share of common stock**                                                                     | **$             0.225   ** |                                                                                                       | $        0.225    |
| ** **                                                                                                             |                                                                                                            |                                                                                                       |                                                                          | ** **                                                                          |                              |      |
| *The accompanying notes are an integral  part of the consolidated financial statements. *                         |

 

|                                                                                                                      |                                                               | ** **   | ** **                                                                |            |
|---------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------|--------------|---------------------------------------------------------------------------|------------|
| **CLECO CORPORATION  CONSOLIDATED STATEMENTS OF  COMPREHENSIVE INCOME  For the three months ended June 30,  (UNAUDITED)** |
|                                                                                                                           |                                                               | **2003**     | ** **                                                                | 2002       |
|                                                                                                                           |                                                               | (Thousands)  |
| Net income (loss)  applicable to common stock                                                                             | **$        (66,858)** |              | $          17,317  |
| Other comprehensive  income (expense), net of tax:                                                                        | ** **                                                    |              |                                                                           |
|                                                                                                                           | Net unrealized loss  from limited partnership                 | **(86)**     |                                                                           | (213)      |
|                                                                                                                           | Net unrealized gains  from available-for-sale securities      | **39 ** |                                                                           | 180   |
| Net comprehensive  expense                                                                                                | **(47)**                                                      |              | (33)                                                                      |
|                                                                                                                           |                                                               | ** **   |                                                                           | ** ** |
| **Comprehensive income  (loss)**                                                                                          | **$        (66,905)** |              | $          17,284  |
|                                                                                                                           |                                                               | ** **   |                                                                           |            |
| *The accompanying notes are an integral part of the  consolidated financial statements.*                                  |

8

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|                                                                                                          |                                                             |                                                              |                                                               | ** **                                        | ** **    |         |
|----------------------------------------------------------------------------------------------------------|-------------------------------------------------------------|--------------------------------------------------------------|---------------------------------------------------------------|---------------------------------------------------|---------------|---------|
| **CLECO CORPORATION  CONSOLIDATED STATEMENTS OF INCOME  For the six months ended June 30,  (UNAUDITED)** |
|                                                                                                          |                                                             |                                                              |                                                               | **2003**                                          | ** **    | 2002    |
|                                                                                                          |                                                             |                                                              |                                                               | (Thousands, except  share and  per share amounts) |
| ** **                                                                                               | ** **                                                  |                                                              |                                                               |
| **Operating revenue**                                                                                    | ** **                                                  |                                                              |                                                               |
|                                                                                                          | Electric operations                                         | **$       310,134 ** |                                                               | $     263,284       |
|                                                                                                          | Tolling operations                                          | **51,809 **                                             |                                                               | 25,494                                       |
|                                                                                                          | Energy trading, net                                         | **(273)**                                                    |                                                               | 3,799                                        |
|                                                                                                          | Energy operations                                           | **38,014 **                                             |                                                               | 15,614                                       |
|                                                                                                          | Other operations                                            | **15,212 **                                             |                                                               | 17,202                                       |
|                                                                                                          |                                                             | Gross operating revenue                                      | **414,896 **                                             |                                                   | 325,393  |
|                                                                                                          |                                                             |                                                              | Electric customer  credits                                    | **(9,411)**                                       |               | (1,575) |
|                                                                                                          |                                                             | Total operating revenue                                      | **405,485 **                                             |                                                   | 323,818  |
| **Operating expenses**                                                                                   | ** **                                                  |                                                              |                                                               |
|                                                                                                          | Fuel used for electric  generation                          | **69,496 **                                             |                                                               | 56,564                                       |
|                                                                                                          | Power purchased for  utility customers                      | **100,427 **                                            |                                                               | 69,842                                       |
|                                                                                                          | Purchases for energy  operations                            | **35,892 **                                             |                                                               | 13,223                                       |
|                                                                                                          | Other operations                                            | **43,383 **                                             |                                                               | 43,163                                       |
|                                                                                                          | Maintenance                                                 | **20,234 **                                             |                                                               | 18,764                                       |
|                                                                                                          | Depreciation                                                | **42,277 **                                             |                                                               | 30,644                                       |
|                                                                                                          | Impairment of  long-lived assets                            | **134,773 **                                            |                                                               | -                                            |
|                                                                                                          | Taxes other than income  taxes                              | **19,702 **                                             |                                                               | 19,819                                       |
|                                                                                                          |                                                             | Total operating  expenses                                    | **466,184 **                                             |                                                   | 252,019  |
| **Operating income  (loss)**                                                                             | **(60,699)**                                                |                                                              | 71,799                                                   |
| Interest income                                                                                          | **1,399 **                                             |                                                              | 528                                                      |
| Allowance for other  funds used during construction                                                      | **1,627 **                                             |                                                              | 922                                                      |
| Equity income from  investees                                                                            | **15,583 **                                            |                                                              | 1,359                                                    |
| Other expense, net                                                                                       | **(3,144)**                                                 |                                                              | (527)                                                         |
| Income (loss) before  interest charges                                                                   | **(45,234)**                                                |                                                              | 74,081                                                   |
| **Interest charges**                                                                                     | ** **                                                  |                                                              |                                                               |
|                                                                                                          | Interest charges,  including amortization of debt expenses, | ** **                                                   |                                                               |                                                   |
|                                                                                                          |                                                             | premium and discount,  net of capitalized interest           | **36,196 **                                              |                                                   | 25,050   |
|                                                                                                          | Allowance for borrowed  funds used during construction      | **(356)**                                                    |                                                               | (470)                                             |
|                                                                                                          |                                                             | Total interest charges                                       | **35,840 **                                              |                                                   | 24,580   |
|                                                                                                          |                                                             |                                                              |                                                               | ** **                                        |               |         |
| **Net income (loss)  before income taxes and preferred dividends**                                       | **(81,074)**                                                |                                                              | 49,501                                                   |
| ** **                                                                                               | ** **                                                  |                                                              |                                                               | ** **                                        |               |         |
| Federal and state  income taxes (benefit)expense                                                         | **(32,486)**                                                |                                                              | 17,666                                                   |
|                                                                                                          |                                                             |                                                              |                                                               | ** **                                        |               |         |
| **Net income (loss)  before preferred dividends**                                                        | **(48,588)**                                                |                                                              | 31,835                                                   |
| Preferred dividends  requirements, net                                                                   | **934 **                                               |                                                              | 937                                                      |
|                                                                                                          |                                                             |                                                              |                                                               | ** **                                        |               |         |
| **Net income (loss)  applicable to common stock**                                                        | **$       (49,522)**     |                                                              | $        30,898  |
| ** **                                                                                               |                                                             |                                                              |                                                               | ** **                                        |               |         |
| *The accompanying notes are an integral  part of the consolidated financial statements.*                 | * *                                                    |

9

----

| ** **                                                                                                           |                                                                                                                              |                                                                                                                         |                                                                                            | ** **                                                                                            | ** **                   |      |
|----------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------|------------------------------|------|
| **CLECO CORPORATION  CONSOLIDATED STATEMENTS OF INCOME (Continued)  For the six months ended June 30,  (UNAUDITED)** |
| ** **                                                                                                           |                                                                                                                              |                                                                                                                         |                                                                                            | **2003**                                                                                              | ** **                   | 2002 |
| ** **                                                                                                           |                                                                                                                              |                                                                                                                         |                                                                                            | (Thousands, except  share and                                                                         |
| ** **                                                                                                           |                                                                                                                              |                                                                                                                         |                                                                                            | per share amounts)                                                                                    |
| **Average shares of  common stock outstanding**                                                                      |                                                                                                                              |                                                                                                                         |                                                                                            |
|                                                                                                                      | Basic                                                                                                                        |                                                                                                                         | **47,138,454   **                                                           |                                                                                                       | 45,569,170    |
|                                                                                                                      | Diluted                                                                                                                      | **47,138,454   **                                                                                        |                                                                                            | 48,269,913                                                                             |
|                                                                                                                      |                                                                                                                              |                                                                                                                         |                                                                                            | ** **                                                                                            |                              |      |
| **Basic earnings per  share**                                                                                        | ** **                                                                                                                   |                                                                                                                         |                                                                                            |
|                                                                                                                      | Net income (loss)  applicable to common stock                                                                                | **$                (1.05)  ** |                                                                                            | $             0.68    |
|                                                                                                                      |                                                                                                                              |                                                                                                                         |                                                                                            | ** **                                                                                            |                              |      |
| **Diluted earnings per  share**                                                                                      | ** **                                                                                                                   |                                                                                                                         |                                                                                            |
|                                                                                                                      | Net income (loss)  applicable to common stock                                                                                | **$                (1.05)  ** |                                                                                            | $             0.66    |
|                                                                                                                      |                                                                                                                              |                                                                                                                         |                                                                                            | ** **                                                                                            |                              |      |
| **Cash dividends paid  per share of common stock**                                                                   | **$                0.450   ** |                                                                                                                         | $           0.445    |
| ** **                                                                                                           |                                                                                                                              |                                                                                                                         |                                                                                            | ** **                                                                                            |                              |      |
| *The accompanying notes are an integral  part of the consolidated financial statements.*                             |

 

|                                                                                                                         |                                                                | ** **  | ** **                                                                |            |
|-------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------|-------------|---------------------------------------------------------------------------|------------|
| **CLECO CORPORATION  CONSOLIDATED STATEMENTS OF  COMPREHENSIVE INCOME  For the six months ended June 30,  (UNAUDITED)** |
|                                                                                                                         |                                                                | **2003**    | ** **                                                                | 2002       |
|                                                                                                                         |                                                                | (Thousands) |
|                                                                                                                         |                                                                | ** **  | ** **                                                                |            |
| Net income (loss)  applicable to common stock                                                                           | **$        (49,522)**  |             | $          30,898  |
| Other comprehensive  income (expense), net of tax:                                                                      | ** **                                                     |             |                                                                           |
|                                                                                                                         | Net unrealized loss  from limited partnership                  | **(67)**    |                                                                           | (213)      |
|                                                                                                                         | Net unrealized gain  (loss) from available-for-sale securities | **(7)**     |                                                                           | 180   |
| Net comprehensive  expense                                                                                              | **(74)**                                                       |             | (33)                                                                      |
|                                                                                                                         |                                                                | ** **  |                                                                           | ** ** |
| **Comprehensive income  (loss)**                                                                                        | **$        (49,596)**  |             | $          30,865  |
|                                                                                                                         |                                                                | ** **  |                                                                           |            |
| *The accompanying notes are an integral part of the  consolidated financial statements.*                                |

10

----

 

|                                                                                          |                                                          |                                                            |                                                                         |                     | ** **                                         |                 |                          |
|------------------------------------------------------------------------------------------|----------------------------------------------------------|------------------------------------------------------------|-------------------------------------------------------------------------|---------------------|----------------------------------------------------|-----------------|--------------------------|
| **CLECO CORPORATION  CONSOLIDATED BALANCE SHEETS  (UNAUDITED)**                          |
|                                                                                          |                                                          |                                                            |                                                                         |                     | **At  June 30,   2003**                            |                 | At   December 31,   2002 |
|                                                                                          |                                                          |                                                            |                                                                         |                     | (Thousands)                                        |
| **Assets**                                                                               |                                                          |                                                            | ** **                                                              |                     |                                                    |
|                                                                                          | Current assets                                           | ** **                                                 |                                                                         |                     |
|                                                                                          |                                                          | Cash and cash  equivalents                                 | **$         62,291 ** |                     | $      114,331  |
|                                                                                          |                                                          | Restricted cash,  current portion                          | **7,215 **                                                         |                     | 7,762                                         |
|                                                                                          |                                                          | Customer accounts  receivable (less allowance for doubtful | ** **                                                              |                     |                                                    |
|                                                                                          |                                                          |                                                            | accounts of $7,185 in  2003 and $1,071 in 2002)                         | **40,041 **    |                                                    | 32,599     |
|                                                                                          |                                                          | Other accounts  receivable                                 | **35,013 **                                                        |                     | 45,264                                        |
|                                                                                          |                                                          | Taxes receivable                                           | **- **                                                             |                     | 23,607                                        |
|                                                                                          |                                                          | Unbilled revenue                                           | **25,008 **                                                        |                     | 20,171                                        |
|                                                                                          |                                                          | Fuel inventory, at  average cost                           | **17,064 **                                                        |                     | 13,309                                        |
|                                                                                          |                                                          | Material and supplies  inventory, at average cost          | **14,888 **                                                        |                     | 14,416                                        |
|                                                                                          |                                                          | Margin deposits                                            | **821 **                                                           |                     | 318                                           |
|                                                                                          |                                                          | Risk management assets                                     | **1,084 **                                                         |                     | 285                                           |
|                                                                                          |                                                          | Accumulated deferred  fuel                                 | **5,713 **                                                         |                     | -                                             |
|                                                                                          |                                                          | Accumulated deferred  federal and state income taxes, net  | **6,828 **                                                         |                     | 3,829                                         |
|                                                                                          |                                                          | Other current assets                                       | **12,095 **                                                        |                     | 8,940                                         |
|                                                                                          |                                                          |                                                            | Total current assets                                                    | **228,061 **   |                                                    | 284,831    |
|                                                                                          | Property, plant and  equipment                           | ** **                                                 |                                                                         |                     |
|                                                                                          |                                                          | Property, plant and  equipment                             | **2,103,557 **                                                     |                     | 2,200,103                                     |
|                                                                                          |                                                          | Accumulated  depreciation                                  | **(747,193)**                                                           |                     | (714,178)                                          |
|                                                                                          |                                                          | Net property, plant and  equipment                         | **1,356,364 **                                                     |                     | 1,485,925                                     |
|                                                                                          |                                                          | Construction  work-in-progress                             | **72,013 **                                                        |                     | 80,230                                        |
|                                                                                          |                                                          |                                                            | Total property, plant  and equipment, net                               | **1,428,377 ** |                                                    | 1,566,155  |
|                                                                                          |                                                          |                                                            |                                                                         |                     | ** **                                         |                 |                          |
|                                                                                          | Equity investment in  investees                          | **270,770 **                                          |                                                                         | 273,688        |
|                                                                                          | Prepayments                                              | **25,233 **                                           |                                                                         | 32,865         |
|                                                                                          | Restricted cash, less  current portion                   | **36,283 **                                           |                                                                         | 45,907         |
|                                                                                          | Regulatory assets and  liabilities - deferred taxes, net | **80,892 **                                           |                                                                         | 65,268         |
|                                                                                          | Long-term receivable                                     | **14,475 **                                           |                                                                         | 10,370         |
|                                                                                          | Other deferred charges                                   | **72,425 **                                           |                                                                         | 65,472         |
| **Total assets**                                                                         | **$    2,156,516 **             |                                                            | $   2,344,556                                       |
|                                                                                          |                                                          |                                                            |                                                                         |                     | ** **                                         |                 |                          |
| *The accompanying notes are an integral part of the  consolidated financial statements.* |
| * *                                                                                 | * *                                                 | * *                                                   | * *                                                                | * *            | *** ***                                       |                 |                          |
| *(Continued on next page)*                                                               | *** ***                                             |                                                            |                                                                         |

11

----

|                                                                                          |                                              |                                                                |                                                            |                                                              | ** **              |                                                          |                          |
|------------------------------------------------------------------------------------------|----------------------------------------------|----------------------------------------------------------------|------------------------------------------------------------|--------------------------------------------------------------|-------------------------|----------------------------------------------------------|--------------------------|
| **CLECO CORPORATION  CONSOLIDATED BALANCE SHEETS (Continued)  (UNAUDITED)**              |
|                                                                                          |                                              |                                                                |                                                            |                                                              | **At  June 30,   2003** |                                                          | At   December 31,   2002 |
|                                                                                          |                                              |                                                                |                                                            |                                                              | (Thousands)             |
| **Liabilities and  shareholders' equity**                                                | ** **                                   |                                                                |                                                            |
| ** **                                                                               | **Liabilities**                              | ** **                                                     |                                                            |                                                              |
|                                                                                          |                                              | Current liabilities                                            | ** **                                                 |                                                              |                         |
|                                                                                          |                                              |                                                                | Short-term debt                                            | **$       213,448 ** |                         | $       315,300  |
|                                                                                          |                                              |                                                                | Long-term debt due  within one year                        | **8,502 **                                              |                         | 45,401                                              |
|                                                                                          |                                              |                                                                | Accounts payable                                           | **69,636 **                                             |                         | 104,046                                             |
|                                                                                          |                                              |                                                                | Retainage                                                  | **6,250 **                                              |                         | 6,278                                               |
|                                                                                          |                                              |                                                                | Accrued payroll                                            | **1,606 **                                              |                         | 2,180                                               |
|                                                                                          |                                              |                                                                | Customer deposits                                          | **21,202 **                                             |                         | 21,087                                              |
|                                                                                          |                                              |                                                                | Taxes accrued                                              | **31,558 **                                             |                         | -                                                   |
|                                                                                          |                                              |                                                                | Interest accrued                                           | **16,070 **                                             |                         | 15,546                                              |
|                                                                                          |                                              |                                                                | Accumulated deferred  fuel                                 | **- **                                                  |                         | 3,509                                               |
|                                                                                          |                                              |                                                                | Risk management  liabilities                               | **- **                                                  |                         | 2,310                                               |
|                                                                                          |                                              |                                                                | Other current  liabilities                                 | **3,179 **                                              |                         | 3,032                                               |
|                                                                                          |                                              |                                                                |                                                            | Total current  liabilities                                   | **371,451 **       |                                                          | 518,689             |
|                                                                                          |                                              | Deferred credits                                               | ** **                                                 |                                                              |                         |
|                                                                                          |                                              |                                                                | Accumulated deferred  federal and state income taxes, net  | **279,833 **                                            |                         | 299,019                                             |
|                                                                                          |                                              |                                                                | Accumulated deferred  investment tax credits               | **19,880 **                                             |                         | 20,744                                              |
|                                                                                          |                                              |                                                                | Other deferred credits                                     | **67,023 **                                             |                         | 57,443                                              |
|                                                                                          |                                              |                                                                |                                                            | Total deferred credits                                       | **366,736 **       |                                                          | 377,206             |
|                                                                                          |                                              | Long-term debt, net                                            | **906,450 **                                          |                                                              | 868,683            |
|                                                                                          |                                              |                                                                | Total liabilities                                          | **1,644,637 **                                          |                         | 1,764,578                                           |
|                                                                                          |                                              |                                                                |                                                            |                                                              | ** **              |                                                          |                          |
| **Shareholders' equity**                                                                 | ** **                                   |                                                                |                                                            |
|                                                                                          | Preferred stock                              | ** **                                                     |                                                            |                                                              |
|                                                                                          |                                              | Not subject to  mandatory redemption                           | **25,354 **                                           |                                                              | 26,578             |
|                                                                                          |                                              | Deferred compensation  related to preferred stock held by ESOP | **(7,045)**                                                |                                                              | (9,070)                 |
|                                                                                          |                                              |                                                                | Total preferred stock  not subject to mandatory redemption | **18,309 **                                             |                         | 17,508                                              |
|                                                                                          | Common shareholders'  equity                 | ** **                                                     |                                                            |                                                              |
|                                                                                          |                                              | Common stock, $1 par  value, authorized 100,000,000 shares,    | ** **                                                 |                                                              |                         |
|                                                                                          |                                              |                                                                | issued 47,261,739 and  47,065,152 shares at June 30, 2003  | ** **                                                   |                         |                                                          |
|                                                                                          |                                              |                                                                | and December 31, 2002, respectively                        | **47,262 **                                             |                         | 47,065                                              |
|                                                                                          |                                              | Premium on capital  stock                                      | **154,719 **                                          |                                                              | 152,745            |
|                                                                                          |                                              | Retained earnings                                              | **295,060 **                                          |                                                              | 366,073            |
|                                                                                          |                                              | Treasury stock, at  cost, 29,218 and 29,959 shares             | ** **                                                 |                                                              |                         |
|                                                                                          |                                              |                                                                | at June 30, 2003 and December 31, 2002, respectively       | **(563)**                                                    |                         | (579)                                                    |
|                                                                                          |                                              | Accumulated other  comprehensive loss                          | **(2,908)**                                                |                                                              | (2,834)                 |
|                                                                                          |                                              |                                                                | Total common  shareholders' equity                         | **493,570 **                                            |                         | 562,470                                             |
|                                                                                          |                                              |                                                                |                                                            | Total shareholders'  equity                                  | **511,879 **       |                                                          | 579,978             |
| **Total liabilities  and shareholders' equity**                                          | **$    2,156,516 ** |                                                                | $    2,344,556                    |
|                                                                                          |                                              |                                                                |                                                            |                                                              | ** **              |                                                          |                          |
| *The accompanying notes are an integral part of the  consolidated financial statements.* |

12

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| **CLECO CORPORATION  CONSOLIDATED STATEMENTS OF CASH FLOWS  For the six months ended June 30,  (UNAUDITED)** |
|--------------------------------------------------------------------------------------------------------------|
|                                                                                                              |  |  |  |  |  |  | **2003** | ** ** | 2002 |
|                                                                                                              |  |  |  |  |  |  | (Thousands) |
| **Operating activities**                                                                                     |  |  |  |
|                                                                                                              | Net income (loss) before preferred dividends | **$     (48,588)** |  | $        31,835  |
|                                                                                                              | Adjustments to reconcile net income (loss) to net cash provided | ** ** |  |  |
|                                                                                                              |  | by operating activities: | ** ** |  |  |
|                                                                                                              |  |  | Depreciation and amortization | **43,903 ** |  | 31,779  |
|                                                                                                              |  |  | Provision for doubtful accounts | **6,701 ** |  | 375  |
|                                                                                                              |  |  | Income from equity investments | **(15,583)** |  | (1,359) |
|                                                                                                              |  |  | Return on equity investment in investee | **15,601 ** |  | 600  |
|                                                                                                              |  |  | Allowance for other funds used during construction | **(1,627)** |  | (922) |
|                                                                                                              |  |  | Impairment of long-lived assets | **134,773 ** |  | -  |
|                                                                                                              |  |  | Amortization of investment tax credits | **(864)** |  | (871) |
|                                                                                                              |  |  | Net deferred income taxes | **(42,101)** |  | 3,842  |
|                                                                                                              |  |  | Deferred fuel costs | **(9,222)** |  | (3,003) |
|                                                                                                              |  |  | Changes in assets and liabilities: | ** ** |  |  |
|                                                                                                              |  |  |  | Accounts receivable | **2,708 ** |  | (79,633) |
|                                                                                                              |  |  |  | Unbilled revenue | **(4,837)** |  | (3,147) |
|                                                                                                              |  |  |  | Fuel, materials and supplies inventory | **(4,227)** |  | (67) |
|                                                                                                              |  |  |  | Prepayments | **713 ** |  | (5,193) |
|                                                                                                              |  |  |  | Accounts payable | **(34,410)** |  | 43,823  |
|                                                                                                              |  |  |  | Customer deposits | **115 ** |  | 284  |
|                                                                                                              |  |  |  | Long-term receivable | **(4,105)** |  | (4,157) |
|                                                                                                              |  |  |  | Other deferred accounts | **7,050 ** |  | 1,564  |
|                                                                                                              |  |  |  | Taxes accrued | **55,165 ** |  | 24,604  |
|                                                                                                              |  |  |  | Interest accrued | **524 ** |  | 660  |
|                                                                                                              |  |  |  | Margin deposits | **(503)** |  | (192) |
|                                                                                                              |  |  |  | Risk management assets and liabilities, net | **(3,109)** |  | (2,069) |
|                                                                                                              |  |  |  | Other, net | **(3,027)** |  | (1,290) |
|                                                                                                              |  | Net cash provided by operating activities | **95,050 ** |  | 37,463  |
| **Investing activities**                                                                                     | ** ** |  |  |
|                                                                                                              | Additions to property, plant and equipment | **(38,465)** |  | (34,742) |
|                                                                                                              | Allowance for other funds used during construction | **1,627 ** |  | 922  |
|                                                                                                              | Proceeds from sale of property, plant and equipment | **259 ** |  | 281  |
|                                                                                                              | Return of (investment in) equity investment in investees | **2,900 ** |  | (32,866) |
|                                                                                                              | Acquisition of partnership net of cash | **- ** |  | (54,561) |
|                                                                                                              |  | Net cash used in investing activities | **(33,679)** |  | (120,966) |
| **Financing activities**                                                                                     | ** ** |  |  |
|                                                                                                              | Cash transferred from restricted accounts, net | **10,171 ** |  | 806  |
|                                                                                                              | Issuance of common stock | **2,095 ** |  | 44,300  |
|                                                                                                              | Repurchase of common stock | **(32)** |  | -  |
|                                                                                                              | Change in short-term debt, net | **(237,550)** |  | (15,995) |
|                                                                                                              | Retirement of long-term obligations | **(38,463)** |  | (3,576) |
|                                                                                                              | Issuance of long-term debt | **175,000 ** |  | 75,000  |
|                                                                                                              | Deferred financing costs | **(2,474)** |  | (3,775) |
|                                                                                                              | Dividends paid on common and preferred stock, net | **(22,158)** |  | (20,958) |
|                                                                                                              |  | Net cash provided by (used in) financing activities | **(113,411)** |  | 75,802  |
| **Net decrease in cash and cash equivalents**                                                                | **(52,040)** |  | (7,701) |
| **Cash and cash equivalents at beginning of period**                                                         | **114,331 ** |  | 11,938  |
| **Cash and cash equivalents at end of period**                                                               | **$        62,291 ** |  | $          4,237  |
| **Supplementary cash flow information**                                                                      | ** ** |  |  |
|                                                                                                              | Interest paid (net of amount capitalized) | **$        33,803 ** |  | $        27,743  |
|                                                                                                              | Income taxes paid/(refunded) | **$      (36,827)** |  | $          3,000  |
| **Supplementary noncash financing activity**                                                                 | ** ** |  |  |
|                                                                                                              | Issuance of treasury stock | **$               49 ** |  | $          1,515  |
|                                                                                                              |  |  |  |  |  |  | ** ** |  |  |
| *The accompanying notes are an integral part of the  consolidated financial statements.*                     |

13

----

***CLECO CORPORATION - MANAGEMENT'SDISCUSSION AND ANALYSIS OF RESULTS                                                 OFOPERATIONS***

          Set forth below isinformation concerning the consolidated results of operations of Cleco for thethree months and six months ended June 30, 2003, and June 30, 2002.  Thefollowing discussion should be read in combination with Cleco's UnauditedConsolidated Financial Statements and the Notes contained in this Form 10-Q.

***Perryville Asset Impairment***

          In May 2003,Perryville signed a letter of intent to sell the Perryville facility to anEntergy subsidiary.  Pursuant to the letter of intent, the sale iscontingent upon execution of a definitive purchase agreement; obtainingnecessary approvals from state and federal regulators, including the LPSC, theFERC and the SEC; completion of a due diligence review by Entergy; the settlementof various project-related contracts; and other customary closingconditions.  The letter of intent expires on August 15, 2003, or upon signing a definitive purchase agreement, whichever is earlier.   Perryvilledoes not expect to execute a definitive purchase agreement that is consistentwith the commercial terms of the letter of intent before August 15, 2003.  However, Entergy has informed Cleco that it may be willing to continue tonegotiate with Cleco regarding the sale of the Perryville facility and managementintends to continue to negotiate with Entergy, Mirant and the Perryvillelenders, even after the expiration of the letter of intent.

          Prior to the July14, 2003 filing by Mirant and certain of its subsidiaries, including MAEM, for voluntaryprotection under Chapter 11 of the U.S. Bankruptcy Code, the carrying value ofthe Perryville facility was compared to its undiscounted, probability-weighted,future cash flows.  Due to Mirant's bankruptcy filing, theprobability weighting of future cash flows under possible scenarios, asrequired by SFAS No. 144, has changed significantly.  As a result ofthe change in probability weighting of Perryville's undiscounted future cashflows, management believes the carrying value of Perryville's long-lived assetsis impaired; therefore, the carrying value of these assets has been reduced tofair value.  The difference between Perryville's carrying value andits fair value resulted in an impairment charge of $134.8 million in the secondquarter of 2003.  This charge is presented in a separate line item inthe operating expenses section below.

          Foradditional information on Perryville's impairment, see Note 15 - "Impairment ofLong-Lived Assets" in the Notes to the Unaudited Financial Statements in thisReport.  For information on the impact of the Mirant bankruptcy onCleco, see Note 16 - "Subsequent Events - Mirant Bankruptcy" in the Notes tothe Unaudited Financial Statements in this Report; and for information on theassumptions and estimates underlying Midstream's accounting for long-livedassets, see "Management's Discussion and Analysis of Financial Condition andResults of Operations - Critical Accounting Policies - Midstream" on pages 33 and34 of the 2002 Annual Report to Shareholders, which is filed as Exhibit 13 to theRegistrants' Form 10-K for the year ended December 31, 2002 and is incorporatedherein by reference.

**Comparison of the Three Months Ended  June 30, 2003 and 2002**

***Cleco Consolidated***

|                                               | ** **                           | ** **        | ** ** | ** ** |               | ** ** | ** ** |               | ** ** |              |
|-----------------------------------------------|--------------------------------------|-------------------|------------|------------|---------------|------------|------------|---------------|------------|--------------|
|                                               | For the three  months ended June 30, |
|                                               | **2003**                             | ** **        | 2002       | ** ** | Variance      | ** ** | Change     |
|                                               | (Thousands)                          | ** **        |            |
| Operating revenue                             | **$**                                | **218,036 ** |            | $          | 174,142  |            | $          | 43,894   | ** ** | 25.2 %  |
| Operating expenses                            | ** **                           | **313,884 ** |            |            | 135,413  | ** ** | ** ** | 178,471  | ** ** | 131.8 % |
| ** **                                    | ** **                           | ** **        |            |            | ** **    | ** ** | ** ** | ** **    | ** ** | ** **   |
| Operating income (loss)                       | **$**                                | **(95,848)**      |            | $          | 38,729   |            | $          | (134,577)     | ** ** | *       |
| ** **                                    | ** **                           | ** **        |            |            | ** **    | ** ** | ** ** | ** **    | ** ** | ** **   |
| Equity income from  investees                 | **$**                                | **7,787 **   |            | $          | 788      |            | $          | 6,999    | ** ** | 888.2 % |
| Interest charges                              | **$**                                | **18,322 **  |            | $          | 12,768   |            | $          | 5,554    | ** ** | 43.5 %  |
| Net income (loss)  applicable to common stock | **$**                                | **(66,858)**      |            | $          | 17,317   |            | $          | (84,175)      | ** ** | *       |
| ** **                                    | ** **                           | ** **        | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** **   |
| ** Not meaningful*                            | * *                             | * *          | * *   | * *   | * *      | * *   | * *   | * *      | * *   | * *     |

14

----

**          **Operatingrevenue increased $43.9 million, or 25.2%, in the second quarter of 2003compared to the same period of 2002 largely as a result of higher base, fuelcost recovery, and transmission revenues from customer sales, higher tollingrevenue from commencement of full commercial operations of the Perryvillefacility in the third quarter of 2002, and higher energy operations revenue dueto increased fuel prices and increased volumes of natural gasmarketed.  Partially offsetting these increases were higher customerrefund credits and lower trading margins.

**          **Operatingexpenses increased $178.5 million, or 131.8%, in the second quarter of 2003compared to the second quarter of 2002 primarily due to the $134.8 million impairmentof long-lived assets discussed above.  Also contributing to thisincrease were higher prices for natural gas purchased for fuel generation andmarketing purposes, increased depreciation expense at Perryville, and increasedother operations and maintenance expenses that were associated with thecommencement of commercial operations at Perryville.  

**          **Equityincome from investees increased $7.0 million, or 888.2%, in the second quarterof 2003 compared to the same period of 2002 primarily as a result of thecommencement of commercial operations of the Acadia facility in the thirdquarter of 2002.  Interest charges increased $5.6 million, or 43.5%,compared to the second quarter of 2002 primarily due to the cessation of capitalizinginterest-related expenses associated with Perryville and Acadia once thesefacilities commenced commercial operations.

**          **Results ofoperations for Cleco Power and Midstream, Cleco's two principal subsidiaries,are more fully described below.

***Cleco Power***

          Cleco Power's netincome applicable to member's equity in the second quarter of 2003 decreased$0.1 million, or 0.8%, compared to the second quarter of2002.  Contributing factors include:

| -   | higher customer refund credits and |
|----------|------------------------------------|
| -   | lower margins from energy trading. |

          Thesewere partially offset by:

| -   | higher base revenue from wholesale and retail customer  sales, |
|----------|----------------------------------------------------------------|
| -   | higher transmission revenue, and                               |
| -   | lower other operations and maintenance expenses.               |

15

----

          Asreflected in the chart below, fuel cost recovery revenue, power purchased forutility customers, and fuel used for electric generation significantlyincreased in the second quarter of 2003 compared to the same period in2002.  However, changes in these items do not significantly impactnet income, since fluctuations in fuel-related costs generally are recoveredthrough fuel cost recovery revenue via Cleco Power's fuel cost adjustmentprocess.

|                                | For the three months ended June 30,                      |
|--------------------------------|----------------------------------------------------------|
|                                | **2003**                                                 |   | 2002 |   | Variance | Change |
|                                | (Thousands)                                              |  |
| Operating revenue              |                                                          |  |  |  |  |  |
|                                | Base                                                     |  | **$  81,222 ** |  | $  78,660  |  | $    2,562  | 3.3 % |
|                                | Fuel cost recovery                                       | **90,045 ** |  | 62,662  |  | 27,383  | 43.7 % |
|                                | Estimated customer credits                               | **(8,500)** |  | (1,225) |  | (7,275) | 593.9 % |
|                                | Energy trading, net                                      | **839 ** |  | 1,036  |  | (197) | (19.0)% |
|                                | Other operations                                         | **7,984 ** |  | 6,782  |  | 1,202  | 17.7 % |
|                                | Intercompany revenue                                     | **541 ** |  | 540  |  | 1  | 0.2 % |
|                                |                                                          | Total operating revenue | **172,131 ** |  | 148,455  |  | 23,676  | 15.9 % |
|                                |                                                          |  |  | ** ** |  |  |  |  |  |
| Operating expenses             | ** **                                               |  |  |  |  |  |
|                                | Fuel used for electric generation                        | **36,855 ** |  | 30,678  |  | 6,177  | 20.1 % |
|                                | Power purchased for utility customers                    | **56,746 ** |  | 37,769  |  | 18,977  | 50.2 % |
|                                | Other operations                                         | **15,087 ** |  | 16,745  |  | (1,658) | (9.9)% |
|                                | Maintenance                                              | **8,744 ** |  | 9,528  |  | (784) | (8.2)% |
|                                | Depreciation                                             | **13,354 ** |  | 13,255  |  | 99  | 0.7 % |
|                                | Taxes other than income taxes                            | **9,399 ** |  | 9,374  |  | 25  | 0.3 % |
|                                |                                                          | Total operating expenses | **140,185 ** |  | 117,349  |  | 22,836  | 19.5 % |
|                                |                                                          |  |  | ** ** |  |  |  |  |  |
| Operating income               | **$  31,946 **                            |  | $  31,106  |  | $       840  | 2.7 % |
| Interest income                | **$       283 ** |  | $       181  |  | $       102  | 56.4 % |
| Interest charges               | **$    7,400 **                 |  | $    7,001  |  | $       399  | 5.7 % |
| Federal and state income taxes | **$    9,481 **                 |  | $    9,478  |  | $           3  | 0.0 % |
| Net income                     | **$  15,253 **                            |  | $  15,381  |  | $      (128) | (0.8)% |
|                                |                                                          |  |  | ** ** |  |  |  |  |  |

|                                     |                  |                      |           | For the three months ended June 30, |
|-------------------------------------|------------------|----------------------|-----------|-------------------------------------|
|                                     |                  |                      |           | **2003**                            |   | 2002 |   | Change |
|                                     |                  |                      |           | (Million kWh)                       |  |  |
| Electric sales                      |                  |                      |           |                                     |  |
|                                     | Residential      | **789**              |           | 796                                 |  | (0.9)% |
|                                     | Commercial       | **440**              |           | 432                                 |  | 1.9 % |
|                                     | Industrial       | **661**              |           | 692                                 |  | (4.5)% |
|                                     | Other retail     | **146**              |           | 150                                 |  | (2.7)% |
|                                     | Unbilled         | **169**              |           | 104                                 |  | 62.5 % |
|                                     |                  | Total retail         | **2,205** |                                     | 2,174 |  | 1.4 % |
|                                     | Sales for resale | **177**              |           | 183                                 |  | (3.3)% |
| Total on-system customer sales      | **2,382**        |                      | 2,357     |                                     | 1.1 % |
| Short-term sales to other utilities | **33**           |                      | 32        |                                     | 3.1 % |
| Sales from trading activities       | **37**           |                      | 71        |                                     | (47.9)% |
|                                     |                  | Total electric sales | **2,452** |                                     | 2,460 |  | (0.3)% |

          ClecoPower's residential customers' demand for electricityis largely affected by weather.  Weather is generally measured incooling degree-days and heating degree-days.  A cooling degree-day isan indication of the likelihood that a consumer will use air conditioning,while a heating degree-day is an indication of the likelihood that a consumerwill use heating.  An increase in heating degree-days does notproduce the same increase in revenue as an increase in cooling degree-days,because customers can choose an alternative fuel source for heating, such asnatural gas.  Normal heating degree-days and cooling degree-days arecalculated for a month by separately calculating the average actual heating andcooling degree-days for that month over a period of about 30 years.

          Thefollowing chart shows how cooling degree-days varied from normal conditions andfrom the prior period.  In the fourth quarter of 2002, Cleco Power changedthe method of determining cooling-degree days and began to use temperature data

16

----

|                                                  | For the three  months ended June 30,                                        |
|-------------------------------------------------------|-----------------------------------------------------------------------------|
|                                                       | **2003**                                                                    | 2002 |
| **Cooling degree-days**                               | ** **                                                                  |  |
|    Increase from Normal                | **8.28 %          ** | 9.33 %         |
|    Increase/(decrease) from Prior Year | **(0.96)%          **     | 1.74 %         |

*Base*

          Base revenue duringthe second quarter of 2003 increased $2.6 million, or 3.3%, compared to thesame period in 2002.  The increase was primarily due to highervolumes of on-system customer kWh sales, primarily in the commercial and publicutility customer classes.  In addition to the 1.1% increase inon-system customer sales, base revenue also increased from energy managementfees as a result of new contracts which began in May 2003.

          On July 7, 2003, one of ClecoPower's existing public utility customers entered into a three-year wholesalecontract with another electric company.  This new contract is scheduledto begin once Cleco Power's contract expires on May 31, 2004.  The expiration ofthis contract without a renewal is expected to reduce annual base revenue byapproximately $4.7 million.  Also anticipated with the non-renewal ofthis contract will be a reduction of capacity expenses of approximately $1.8million, resulting in an expected net annual reduction of $2.9 million inpre-tax operating income.

          On July 16, 2003, the LPSCapproved Cleco Power's new five-year contract with one of its existingindustrial customers.  As a result of the terms in the new contract,base revenue is expected to decrease by approximately $1.0 million in 2003, andby almost $2.0 million annually over the remaining life of the new agreement.

          During the secondquarter of 2004, Cleco Power will begin serving a new industrial customer andduring the fourth quarter of 2004 will begin serving a current customer'sexpansion.  The new service and expansion of current service isexpected to increase 2004 base revenue by approximately $0.6 million andannually increase revenue by approximately $1.1 million beginning in 2005.

*Fuel Cost Recovery*

          Fuel cost recoveryrevenue collected from customers increased primarily as a result of an increaseof 28.8% in the average per unit cost of power purchased from the energy marketin the second quarter of 2003 compared to the second quarter of 2002 and a33.6% increase in the average per unit cost of fuel used for electricoperations.  The increase in fuel used for electric generation isprimarily the result of higher natural gas prices.  The increase in theper unit cost of purchased power was influenced by higher natural gas prices,as well as other market factors.  Changes in fuel costshistorically have not significantly affected Cleco Power's netincome.  Generally, all fuel and purchased power costs are recoveredthrough the LPSC-established Fuel Adjustment Clause that enables Cleco Power topass on to its customers substantially all such charges.  Cleco Power'sFuel Adjustment Clause filings are submitted monthly and are regulated by theLPSC (representing about 93% of the total fuel costs) and theFERC.  All filings are subject to refund until final approval isreceived from the LPSC upon completion of a periodic audit.  In thesecond half of 2002, the LPSC informed Cleco Power that it was planning toconduct a periodic fuel audit.  The audit commenced in March 2003 andincludes Fuel Adjustment Clause filings for January 2001 through December2002.  The audit, pursuant to the Fuel Adjustment Clause GeneralOrder issued November 6, 1997 in Docket No. U-21497, is required to beperformed no less frequently than every other year; however, this is the firstLPSC Fuel Adjustment Clause audit of ClecoPower.  LPSC-jurisdictional revenue recovered by Cleco Power throughits Fuel Adjustment Clause for the audit period of January 2001 throughDecember 2002 is $567.1 million.  Management is unable to predict theresults of the LPSC fuel audit, which could require Cleco Power to make arefund of previously recovered revenue and could adversely impact theRegistrants' results of operations and financial condition.  The LPSCstaff expects to issue its findings and recommendations related to the fuelaudit by the first quarter of 2004.

*Estimated Customer Credits*

          Estimated customercredits during the second quarter of 2003 increased $7.3 million, or 593.9%,compared to the same period in 2002.  This increase in estimated customerrefunds is a result of increased base revenue and decreased non-fuel related operatingexpenses in the second quarter of 2003 as compared to the same period in2002.  The potential refunds are

17

----

based on results for each 12-monthperiod ended September 30.  Therefore, the financial results of thethird quarter of 2003 will impact the ultimate amounts to be refunded, ifany.  For additional information on the accrual for estimatedcustomer credits, see Note 8 - "Accrual for Estimated Customer Credits" in theNotes to the Unaudited Financial Statements in this Report.

*Energy Trading, Net*

          For thesecond quarter of 2003 compared to the second quarter of 2002, decreases inpower and gas volumes were directly related to the discontinuation ofspeculative trading activities in the fourth quarter of 2002.  Mostof Cleco Power's exposure to the market was mitigated in the summer of 2002 bytransactions that were entered into to specifically offset openpositions.  Volumes and associated revenue were affected by thesepositions during the second quarter of 2003 and are expected to continue to beimpacted by these positions through the third quarter of 2003.

          Generally, ClecoPower's energy trading transactions are considered non-hedging derivativesunder SFAS No. 133, as amended, which requires that the transactions bereported at fair market value or "marked-to-market."  The chart belowpresents the components of energy trading, net.

|                        | For the three  months ended June 30,                                |
|------------------------|---------------------------------------------------------------------|
|                        | **2003**                                                            | 2002 | Variance | Change |
|                        | (Thousands)                                                         |
| Energy trading margins | **$  720     **                  | $     777      | $     (57)     | (7.3)%  |
| Mark-to-market         | **     119     ** |        259      |      (140)    | (54.1)%  |
| Energy trading, net    | **$  839     **                  | $  1,036      | $   (197)     | (19.0)%  |

          Energy trading, netdecreased $0.2 million, or 19.0%, in the second quarter of 2003 from the sameperiod in 2002.  This was primarily due to a $1.1 million decrease asa result of Cleco Power's efforts to mitigate most of its exposure to themarket following the discontinuation of speculative trading activities in thefourth quarter of 2002, partially offset by a $0.9 million increase as a resultof amounts required to be paid to Cleco Power pursuant to the ConsentAgreement.  For additional information on the Consent Agreement andFERC settlement, see Note 16 - "Subsequent Events - FERC Settlement" in theNotes to the Unaudited Financial Statements in this Report.

*Other Operations*

          Other operationsrevenue increased $1.2 million, or 17.7%, in the second quarter of 2003compared to the same period of 2002 primarily due to an increase intransmission revenue.  The increase in transmission revenue waslargely a result of additional transmission services being provided to thetolling counterparties at Acadia, which commenced commercial operations in thethird quarter of 2002.

*Operating Expenses*

          Operating expensesincreased $22.8 million, or 19.5%, in the second quarter of 2003 compared tothe same period of 2002.  Fuel used for electric generation increased$6.2 million, or 20.1%, primarily due to an increase in the average per unitcost of fuel from $2.44 per MMBtu in the second quarter of 2002 to $3.26 perMMBtu in the same period of 2003.  Power purchased for utilitycustomers increased $19.0 million, or 50.2%, largely due to an increase in theaverage per unit cost and volumes of purchased power, and an increase incapacity payments.  The increase in power purchased for utilitycustomers was partially offset by a $1.1 million decrease resulting from theConsent Agreement.  For additional information on the ConsentAgreement and FERC settlement, see Note 16 - "Subsequent Events - FERCSettlement" in the Notes to the Unaudited Financial Statements in thisReport.  Increases in fuel used for electric generation and powerpurchased for utility customers both were influenced by higher natural gasprices.  Other operations expense decreased $1.7 million, or 9.9%,primarily due to reduced staff resulting from Cleco's 2002 organizationalrestructuring.  Maintenance expenses during the second quarter of2003 decreased $0.8 million, or 8.2%, compared to the same period of 2002.  Theprimary reason for this decrease was lower plant outage costs in the secondquarter of 2003.

18

----

***Midstream***

|                                                  |                                                                              |                                                                   |                                                                                         | For the three months ended June 30,               |
|--------------------------------------------------|------------------------------------------------------------------------------|-------------------------------------------------------------------|-----------------------------------------------------------------------------------------|---------------------------------------------------|
|                                                  |                                                                              |                                                                   |                                                                                         | **2003**                                          | ** ** | 2002 | ** ** | Variance | Change |
|                                                  |                                                                              |                                                                   |                                                                                         | (Thousands)                                       |  |
|                                                  |                                                                              |                                                                   |                                                                                         |                                                   |  |  |  |  |  |
| Operating revenue                                |                                                                              |                                                                   |                                                                                         |                                                   |  |  |
|                                                  | Tolling operations                                                           | **$        28,032 ** |                                                                                         | $      13,874  |  | $      14,158  | 102.0 % |
|                                                  | Energy trading, net                                                          | **(2,201)**                                                       |                                                                                         | 1,749                                        |  | (3,950) | *  |
|                                                  | Energy operations                                                            | **19,360 **                                                  |                                                                                         | 7,007                                        |  | 12,353  | 176.3 % |
|                                                  | Other operations                                                             | **176 **                                                     |                                                                                         | 3,594                                        |  | (3,418) | (95.1)% |
|                                                  | Intercompany revenue                                                         | **126 **                                                     |                                                                                         | 1,943                                        |  | (1,817) | (93.5)% |
|                                                  |                                                                              | Total operating revenue                                           | **45,493 **                                                                        |                                                   | 28,167  |  | 17,326  | 61.5 % |
|                                                  |                                                                              |                                                                   |                                                                                         |                                                   |  |  |  |  |  |
| Operating expenses                               |                                                                              |                                                                   |                                                                                         |                                                   |  |  |
|                                                  | Purchases for energy operations                                              | **18,124 **                                                  |                                                                                         | 5,453                                        |  | 12,671  | 232.4 % |
|                                                  | Other operations                                                             | **10,951 **                                                  |                                                                                         | 9,858                                        |  | 1,093  | 11.1 % |
|                                                  | Maintenance                                                                  | **2,108 **                                                   |                                                                                         | 2,281                                        |  | (173) | (7.6)% |
|                                                  | Depreciation                                                                 | **4,798 **                                                   |                                                                                         | 2,143                                        |  | 2,655  | 123.9 % |
|                                                  | Impairment of long-lived assets                                              | **134,773 **                                                 |                                                                                         | -                                            |  | 134,773  | *  |
|                                                  | Taxes other than income taxes                                                | **131 **                                                     |                                                                                         | 335                                          |  | (204) | (60.9)% |
|                                                  |                                                                              | Total operating expenses                                          | **170,885 **                                                                       |                                                   | 20,070  |  | 150,815  | 751.4 % |
|                                                  |                                                                              |                                                                   |                                                                                         | ** **                                        |  |  |  |  |  |
| Operating income (loss)                          | **$    (125,392)**                                       |                                                                   | $        8,097                             |                                                   | $  (133,489) | *  |
|                                                  |                                                                              |                                                                   |                                                                                         |                                                   |  |  |  |  |  |
| Equity income from investees                     | **$          7,787 ** |                                                                   | $           788             |                                                   | $        6,999  | 888.2 % |
| Other income (expense), net                      | **$           (797)** |                                                                   | $             21  |                                                   | $         (818) | *  |
| Interest charges                                 | **$        10,030 **            |                                                                   | $        5,275                             |                                                   | $        4,755  | 90.1 % |
| Federal and state income taxes (benefit) expense | **$      (49,076)**                            |                                                                   | $           991             |                                                   | $    (50,067) | *  |
| Net income (loss) applicable to member's equity  | **$      (79,028)**                            |                                                                   | $        2,684                             |                                                   | $    (81,712) | *  |
|                                                  |                                                                              |                                                                   |                                                                                         |                                                   |  |  |  |  |  |
| ** Not meaningful*                               | * *                                                                     | * *                                                          | * *                                                                                | * *                                          | * * | * * |

          Midstream's net lossapplicable to member's equity for the second quarter of 2003 was $79.0 million,significantly below the $2.7 million earned in the same period of2002.  Factors contributing to this decrease include:

| -   | impairment of long-lived assets,   |
|----------|------------------------------------|
| -   | lower margins from energy trading, |
| -   | higher other operations expense,   |
| -   | higher depreciation expense,       |
| -   | higher interest charges, and       |
| -   | higher effective income tax rate.  |

These were partially offset by:

| -   | higher tolling revenue and           |
|----------|--------------------------------------|
| -   | higher equity income from investees. |

*Tolling Operations*

          Tolling operationsrevenue increased $14.2 million, or 102.0%, in the second quarter of 2003compared to the second quarter of 2002 primarily due to the Perryville facilitycommencing full commercial operations in the third quarter of2002.  This increase was partially offset by decreased generationfrom the Evangeline facility, which was dispatched less frequently in thesecond quarter of 2003 compared to the second quarter of 2002.

*Energy Trading, Net*

          For the secondquarter of 2003 compared to the same period of 2002, decreases in power and gasvolumes were directly related to the discontinuation of Midstream's speculativetrading activities in the fourth quarter of 2002.  Most of Midstream'sexposure to the market from positions opened prior to the change in itsspeculative trading strategy was mitigated in the fourth quarter of 2002 bytransactions that were entered into to specifically offset openpositions.  Volumes and associated revenue

19

----

          Generally,Midstream's energy trading transactions are considered non-hedging derivativesunder SFAS No. 133, as amended, which requires that the transactions bereported at fair market value or "marked-to-market."  The chart belowpresents the components of energy trading, net.

|                        | For the three  months ended June 30,                                                                   |
|------------------------|--------------------------------------------------------------------------------------------------------|
|                        | **2003**                                                                                               | 2002 | Variance | Change |
|                        | (Thousands)                                                                                            |
| Energy trading margins | **$   (2,264)    **                                                 | $     417      | $  (2,681)     | *   |
| Mark-to-market         | **           63     ** |     1,332      |    (1,269)     | (95.3)%  |
| Energy trading, net    | **$   (2,201)  **                                                             | $  1,749    | $  (3,950)   | *  |
|                        |                                                                                                   |   |   |  |
| ** Not meaningful*     |                                                                                                   |   |   |  |

          Energy trading, netdecreased $4.0 million in the second quarter of 2003 compared to the sameperiod of 2002.  The decrease was primarily due to the discontinuationof Midstream's speculative trading activities in late 2002, as well as amountsrequired to be paid to Cleco Power under the Consent Agreement.  Foradditional information on the Consent Agreement and FERC settlement, see Note16 - "Subsequent Events - FERC Settlement" in the Notes to the UnauditedFinancial Statements in this Report.

*Energy Operations*

          The $12.4 million,or 176.3%, increase in energy operations revenue during the second quarter of2003 compared to the same period of 2002 was primarily due to increases in theaverage per unit cost of natural gas and volumes of natural gas marketed byCleco Energy to third parties.  In 2002, Cleco Energy sold gasproduction to Marketing & Trading as a part of its speculative trading portfolio,which included trading physical gas.  These affiliate transactions previouslywere eliminated from consolidated Midstream results and are not reflected inthe charts below.  Due to Marketing & Trading's discontinuationof speculative trading, Cleco Energy was able to market more physical gas tothird parties in 2003.  This increase in revenues to third parties isreflected in the wholesale natural gas marketed section below.  Energymanagement services revenue decreased $0.1 million, or 32.1%, for the secondquarter of 2003 compared to the same period of 2002 as a result of Marketing& Trading's termination of all of its energy management services contractsin May 2003.  Intercompany volume and revenue within Midstreamsubsidiaries have been eliminated and therefore are not reflected in the chartsbelow.  The chart below presents the components of energy operationsrevenue.

|                                                 | For the three months ended June 30,                                  |
|-------------------------------------------------|----------------------------------------------------------------------|
|                                                 | **2003**                                                             | 2002 | Variance | Change |
|                                                 | (Thousands)                                                          |  |
| Energy management  services                     | **$       290   ** | $     427    | $       (137)   | (32.1)%   |
| Wholesale natural gas  marketed                 | **    19,070   **                 |     6,580    |      12,490    | 189.8 %   |
|      Energy operations | **$  19,360   **                            | $  7,007    | $   12,353    | 176.3 %   |

          The chart belowpresents a summary of energy management kWh and natural gas marketed during thesecond quarter of 2003 and 2002.

|                                 | For the three  months ended June 30,        |
|---------------------------------|---------------------------------------------|
|                                 | **2003**                                    | 2002 | Change |
| Energy management (million kWh) | **79     **        | 115      | (31.3)%   |
| Natural gas (MMBtu)             | **3,378,276     ** | 1,766,498      | 91.2 %   |

*Other Operations*

          Other operationsrevenue decreased $3.4 million, or 95.1%, in the second quarter of 2003compared to the same period of 2002 primarily due to a change in the accountingtreatment of Midstream's power plant operations, maintenance, and engineeringservices that were provided to Perryville.  Prior to Midstream'spurchase of Mirant's 50% ownership interest in Perryville in June 2002, revenuefrom these services was included in other operations revenue under the equitymethod of

20

----

accounting.  Subsequent to the acquisition,Midstream discontinued the equity method of accounting for Perryville andinstead consolidated Perryville's assets, liabilities, revenue and expensesunder the full consolidation method effective July 2002.  As a resultof this change in accounting treatment, all revenue associated with Midstream'splant operations for Perryville is included in intercompany revenue and has beeneliminated.

*Intercompany Revenue*

          Intercompanyrevenue decreased $1.8 million, or 93.5%, in the second quarter of 2003compared to the same period of 2002.  The decrease was primarily dueto lower volumes of affiliate transactions combined with a significantlyreduced gas transportation rate charged to an affiliate.

*Operating Expenses*

          Purchases forenergy operations increased $12.7 million, or 232.4%, in the second quarter of2003 compared to the same period of 2002 primarily due to the same factorsaffecting energy operations revenue.  Other operations expense increased$1.1 million, or 11.1%, during the second quarter of 2003 compared to the sameperiod of 2002 primarily due to increased expenses associated with thecommencement of the Perryville facility's full commercial operations in thethird quarter of 2002.  Also contributing to the increase was $6.3million of reserves recorded at Perryville at June 30, 2003, to reflect potential uncollectible MAEM receivables, as a result of Mirant and certain of itsaffiliates filing a voluntary petition for reorganization under Chapter 11 ofthe U.S. Bankruptcy Code on July 14, 2003.  For additionalinformation on Mirant's bankruptcy, see Note 16 - "Subsequent Events - MirantBankruptcy" in the Notes to the Unaudited Financial Statements in thisReport.  Partially offsetting these increases were decreased otheroperations expense as a result of Midstream's reduced participation inunregulated energy markets, including wholesale generation asset development,project analytics, energy marketing and trading activities, and power plantmaintenance and engineering services.  Maintenance expenses decreased$0.2 million, or 7.6%, in the second quarter of 2003 compared to the sameperiod in 2002 primarily due to Midstream's reduced activity in power plantmaintenance, partially offset by increased maintenance expense at Evangeline dueto earlier than planned replacement of combustion turbine parts and certainrepairs on the combustion turbines under the LTP Agreement.  Depreciationexpense increased $2.7 million, or 123.9%, largely due to the completion ofconstruction of the Perryville facility in the third quarter of 2002.  A$134.8 million charge for impairment of long-lived assets at Perryville was theprincipal cause of the significant increase in operating expenses.  Thischarge was incurred during the second quarter of 2003, whereas no such chargewas incurred during the second quarter of 2002.  For additionalinformation on this charge, see Note 15 - "Impairment of Long-Lived Assets" inthe Notes to the Unaudited Financial Statements in this Report.

*Equity Income from Investees*

          Equity income frominvestees increased $7.0 million, or 888.2%, for the second quarter of 2003compared to the second quarter of 2002 primarily due to increased equityearnings from Acadia as a result of the facility beginning commercialoperations in the third quarter of 2002.  For additional informationon Acadia, see Note 4 - "Equity Investment in Investees" in the Notes to theUnaudited Financial Statements in this Report.

*Other Income (Expense), Net*

          Other income (expense),net increased $0.8 million during the second quarter of 2003 compared to thesame period of 2002 primarily due to the accrual of a $0.8 million civilpenalty agreed to in the Consent Agreement.  For additional informationon the Consent Agreement, see Note 16 - "Subsequent Events - FERC Settlement"in the Notes to the Unaudited Financial Statements in this Report.

*Interest Charges*

          Interest charges increased$4.8 million, or 90.1%, during the second quarter of 2003 compared to thesecond quarter of 2002 primarily due to a change in the treatment ofinterest-related expenses associated with Midstream's asset developmentactivity.  Prior to the third quarter of 2002 commencement ofcommercial operations at Perryville and Acadia, interest related to these projectswas capitalized in accordance with SFAS No. 58.

21

----

*Income Taxes*

         Income tax expense in thesecond quarter of 2003 decreased $50.1 million, providing a net tax benefit of$49.1 million, compared to the second quarter of 2002.  Midstream'seffective income tax rate for the second quarter of 2003 increased to 38.3%from 27.0% compared to the second quarter of 2002.  The increase inthe effective income tax rate was largely due to a loss recognized byPerryville as a result of a $134.8 million impairment charge recorded in thesecond quarter of 2003 combined with a non-tax deductible civil penalty of $0.8million payable to the FERC in accordance with the ConsentAgreement.  Adding to the quarterly variance was the impact of afavorable true-up amount recorded during the second quarter of 2002 to reflectIRS audit adjustments.  For information on the impairment charge, seeNote 15 - "Impairment of Long-Lived Assets" and for information on the ConsentAgreement and FERC settlement, see Note 16 - "Subsequent Events - FERCSettlement" in the Notes to the Unaudited Financial Statements in thisReport.  For information about the assumptions and estimatesunderlying Midstream's accounting for the effect of income taxes, see "Item 2Management's Discussion and Analysis of Financial Condition and Results ofOperations - Financial Condition - Critical Accounting Policies" in thisReport.

**Comparison of the Six Months Ended  June 30, 2003 and 2002**

***Cleco Consolidated***

|                                               | ** **                         | ** **        | ** ** |            |               | ** ** |          |               | ** ** |             |
|-----------------------------------------------|------------------------------------|-------------------|------------|------------|---------------|------------|----------|---------------|------------|-------------|
|                                               | For the six months  ended June 30, |
|                                               | **2003**                           | ** **        | 2002       | ** ** | Variance      | ** ** | Change   |
|                                               | (Thousands)                        | ** **        |            |
| Operating revenue                             | **$**                              | **405,485 ** | ** ** | $          | 323,818  | ** ** | $        | 81,667   | ** ** | 25.2 % |
| Operating expenses                            | ** **                         | **466,184 ** | ** ** |            | 252,019  | ** ** |          | 214,165  | ** ** | 85.0 % |
| ** **                                    | ** **                         | ** **        | ** ** |            | ** **    | ** ** |          | ** **    | ** ** | ** **  |
| Operating income (loss)                       | **$**                              | **(60,699)**      | ** ** | $          | 71,799   | ** ** | $        | (132,498)     | ** ** | *****       |
| ** **                                    | ** **                         | ** **        | ** ** |            | ** **    | ** ** |          | ** **    | ** ** | ** **  |
| Equity income from  investees                 | **$**                              | **15,583 **  | ** ** | $          | 1,359    | ** ** | $        | 14,224   | ** ** | *****       |
| Interest charges                              | **$**                              | **35,840 **  | ** ** | $          | 24,580   | ** ** | $        | 11,260   | ** ** | 45.8 % |
| Net income (loss)  applicable to common stock | **$**                              | **(49,522)**      | ** ** | $          | 30,898   | ** ** | $        | (80,420)      | ** ** | *****       |
| ** **                                    | ** **                         | ** **        | ** ** |            | ** **    | ** ** |          | ** **    | ** ** | ** **  |
| ** Not meaningful*                            | * *                           | * *          | * *   | * *   | * *      | * *   | * * | * *      | * *   | * *    |

**          **Consolidatednet income (loss) applicable to common stock decreased $80.4 million in thefirst six months of 2003 compared to the first six months of 2002 primarily dueto the $134.8 million impairment charge at Perryville discussedabove.  Also contributing to the decrease was reduced earnings at theholding company level.  Earnings at the holding company leveldecreased primarily due to higher corporate legal and consulting feesassociated with the FERC and LPSC investigations of certain tradingactivities.  On July 25, 2003, FERC approved a settlement resolvingits non-public investigation of Cleco's energy marketing and trading practices,a review of which was initially disclosed in November 2002.  Thesettlement included penalties and remedies that resulted in a $0.8 milliondecrease in consolidated net income applicable to common stock.  Foradditional information on the FERC settlement, see Note 16 - "Subsequent Events- FERC Settlement" in the Notes to the Unaudited Financial Statements in thisReport.

**          **Operatingrevenue increased $81.7 million, or 25.2%, in the first six months of 2003compared to the same period of 2002 largely as a result of higher base, fuelcost recovery, and transmission revenues from customer sales, higher tollingrevenue from commencement of full commercial operations of the Perryvillefacility in the third quarter of 2002, and higher energy operations revenue dueto increased fuel prices and increased volumes of natural gasmarketed.  Partially offsetting these increases were higher customerrefund credits and lower trading margins.

**          **Operatingexpenses increased $214.2 million, or 85.0%, in the first six months of 2003compared to the first six months of 2002 primarily due to the $134.8 million impairmentof long-lived assets discussed above.  Also contributing to thisincrease were higher prices for natural gas purchased for fuel generation andmarketing purposes, increased depreciation expense at Perryville and Evangeline,and increased other operations and maintenance expenses that were associatedwith the commencement of commercial operations at Perryville.

22

----

**          **Equityincome from investees increased $14.2 million in the first six months of 2003compared to the same period of 2002 primarily as a result of the commencementof commercial operations of the Acadia facility in the third quarter of2002.  Interest charges increased $11.3 million, or 45.8%, comparedto the first six months of 2002 primarily due to the cessation of capitalizing interest-relatedexpenses associated with Perryville and Acadia once these facilities commencedcommercial operations.

**          **Results ofoperations for Cleco Power and Midstream are more fully described below.

***Cleco Power***

          Cleco Power's netincome applicable to member's equity in the first six months of 2003 increased$1.7 million, or 5.8%, compared to the first six months of2002.  Contributing factors include:

| -   | higher base revenue from wholesale and retail customer  sales, |
|----------|----------------------------------------------------------------|
| -   | higher transmission revenue,                                   |
| -   | lower other operations expense, and                            |
| -   | lower effective income tax rate.                               |

These were partially offset by:

| -   | higher capacity payments,        |
|----------|----------------------------------|
| -   | higher customer refund credits,  |
| -   | higher depreciation expense, and |
| -   | higher interest charges.         |

          As reflected in thechart below, fuel cost recovery revenue, power purchased for utility customers,and fuel used for electric generation significantly increased in the first sixmonths of 2003 compared to the same period in 2002.  However, changesin these items do not significantly impact net income, since fluctuations infuel-related costs generally are recovered through fuel cost recovery revenuevia Cleco Power's fuel cost adjustment process.

|                                 |                                                                                  |                          |                                                                              |                                   |                                                                  |              |                                                  |              |             |        |
|---------------------------------|----------------------------------------------------------------------------------|--------------------------|------------------------------------------------------------------------------|-----------------------------------|------------------------------------------------------------------|--------------|--------------------------------------------------|--------------|-------------|--------|
|                                 |                                                                                  |                          |                                                                              | For the six months ended June 30, |
|                                 |                                                                                  |                          |                                                                              | **2003**                          | ** **                                                       | 2002         | ** **                                       | Variance     |        | Change |
|                                 |                                                                                  |                          |                                                                              | (Thousands)                       |                                                                  |              |
| Operating revenue               |                                                                                  |                          |                                                                              |                                   |                                                                  |              |                                                  |
|                                 | Base                                                                             |                          | **$    149,479 **                                   |                                   | $    146,014                            |              | $      3,465  |              | 2.4 %  |
|                                 | Fuel cost recovery                                                               | **160,655 **        |                                                                              | 117,270                      |                                                                  | 43,385  |                                                  | 37.0 %  |
|                                 | Estimated customer credits                                                       | **(9,411)**              |                                                                              | (1,575)                           |                                                                  | 7,836   |                                                  | 497.5 % |
|                                 | Energy trading, net                                                              | **630 **            |                                                                              | 908                          |                                                                  | (278)        |                                                  | (30.6)%      |
|                                 | Other operations                                                                 | **15,179 **         |                                                                              | 13,231                       |                                                                  | 1,948   |                                                  | 14.7 %  |
|                                 | Intercompany revenue                                                             | **1,102 **          |                                                                              | 974                          |                                                                  | 128     |                                                  | 13.1 %  |
|                                 |                                                                                  | Total operating revenue  | **317,634 **                                                            |                                   | 276,822                                                     |              | 40,812                                      |              | 14.7 % |
|                                 |                                                                                  |                          |                                                                              | ** **                        |                                                                  |              |                                                  |              |             |        |
| Operating expenses              | ** **                                                                       |                          |                                                                              |                                   |                                                                  |              |                                                  |
|                                 | Fuel used for electric generation                                                | **69,598 **         |                                                                              | 57,237                       |                                                                  | 12,361  |                                                  | 21.6 %  |
|                                 | Power purchased for utility customers                                            | **99,341 **         |                                                                              | 69,872                       |                                                                  | 29,469  |                                                  | 42.2 %  |
|                                 | Other operations                                                                 | **27,467 **         |                                                                              | 30,151                       |                                                                  | (2,684)      |                                                  | (8.9)%       |
|                                 | Maintenance                                                                      | **15,496 **         |                                                                              | 15,611                       |                                                                  | (115)        |                                                  | (0.7)%       |
|                                 | Depreciation                                                                     | **26,596 **         |                                                                              | 25,980                       |                                                                  | 616     |                                                  | 2.4 %   |
|                                 | Taxes other than income  taxes                                                   | **18,539 **         |                                                                              | 18,618                       |                                                                  | (79)         |                                                  | (0.4)%       |
|                                 |                                                                                  | Total operating expenses | **257,037 **                                                            |                                   | 217,469                                                     |              | 39,568                                      |              | 18.2 % |
|                                 |                                                                                  |                          |                                                                              | ** **                        |                                                                  |              |                                                  |              |             |        |
| Operating income                | **$      60,597 **                            |                          | $      59,353                             |                                   | $      1,244                  |              | 2.1 %                                       |
| Interest income                 | **$           634 ** |                          | $           290  |                                   | $         344  |              | 118.6 %                                     |
| Interest charges                | **$      14,321 **                            |                          | $      13,538                             |                                   | $         783  |              | 5.8 %                                       |
| Federal and state income  taxes | **$      15,909 **                            |                          | $      17,403                             |                                   | $    (1,494)                                 |              | (8.6)%                                           |
| Net income                      | **$      31,191 **                            |                          | $      29,479                             |                                   | $      1,712                  |              | 5.8 %                                       |

23

----

|                                     |                  |                      |           | For the six months ended June 30, |
|-------------------------------------|------------------|----------------------|-----------|-----------------------------------|
|                                     |                  |                      |           | **2003**                          |   | 2002 |   | Change |
|                                     |                  |                      |           | (Million kWh)                     |  |  |
| Electric sales                      |                  |                      |           |                                   |  |
|                                     | Residential      | **1,595**            |           | 1,568                             |  | 1.7 % |
|                                     | Commercial       | **833**              |           | 806                               |  | 3.3 % |
|                                     | Industrial       | **1,319**            |           | 1,308                             |  | 0.8 % |
|                                     | Other retail     | **280**              |           | 281                               |  | (0.4)% |
|                                     | Unbilled         | **89**               |           | 111                               |  | (19.8)% |
|                                     |                  | Total retail         | **4,116** |                                   | 4,074 |  | 1.0 % |
|                                     | Sales for resale | **340**              |           | 317                               |  | 7.3 % |
| Total on-system customer sales      | **4,456**        |                      | 4,391     |                                   | 1.5 % |
| Short-term sales to other utilities | **64**           |                      | 59        |                                   | 8.5 % |
| Sales from trading activities       | **73**           |                      | 122       |                                   | (40.2)% |
|                                     |                  | Total electric sales | **4,593** |                                   | 4,572 |  | 0.5 % |

          Thefollowing chart shows how cooling and heating degree-days varied from normalconditions and from the prior period.  In the fourth quarter of 2002,Cleco Power changed the method of determining heating and cooling degree-daysand began to use temperature data collected by the NOAA for thispurpose.  Cooling and heating degree-days for each period indicatedhave been adjusted to reflect the change in the temperature data source.

|                                                       | For the six months  ended June 30,                                           |
|-------------------------------------------------------|------------------------------------------------------------------------------|
|                                                       | **2003**                                                                     | 2002 |
| **Cooling degree-days**                               | ** **                                                                   |  |
|    Increase from Normal                | **3.67 %          **  | 14.00%         |
|    Increase/(decrease) from Prior Year | **(9.06)%          **      | 7.89 %        |
| **Heating degree-days**                               | ** **                                                                   |  |
|    Increase/(decrease) from Normal     | **9.52 %          **  | (0.48)%        |
|    Increase from Prior Year            | **10.05 %          ** | 0.48%         |

*Base*

          Base revenue duringthe first six months of 2003 increased $3.5 million, or 2.4%, compared to thesame period in 2002.  The increase was primarily due to highervolumes of on-system customer kWh sales that were spread throughout themajority of customer classes.  In addition to the 1.5% increase inon-system customer sales, base revenue also increased from energy management feesas a result of new contracts which began in May 2003.  Forinformation on the anticipated effects of the non-renewal of one of Cleco Power'swholesale contracts, its renewal of one of its contracts with an industrialcustomer, and the additional revenue from industrial customers, see "-Comparison of the Three Months Ended June 30, 2003 and 2002 - Cleco Power -Base."

*Fuel Cost Recovery*

          Fuel cost recoveryrevenue collected from customers increased primarily as a result of an increaseof 39.3% in the average per unit cost of power purchased from the energy marketin the first six months of 2003 compared to the first six months of 2002 and a46.8% increase in the average per unit cost of fuel used for electricoperations.  The increase in fuel used for electric generation isprimarily the result of higher natural gas prices.  The increase in theper unit cost of purchased power was influenced by higher natural gas prices,as well as other market factors.  For information on Cleco Power'sability to recover fuel and purchase power costs, see "- Comparison of theThree Months Ended June 30, 2003 and 2002 - Cleco Power - Fuel Cost Recovery."

*Estimated Customer Credits*

          Estimated customercredits during the first six months of 2003 increased $7.8 million, or 497.5%,compared to the same period in 2002.  This increase in estimated customerrefunds is a result of increased base revenue and decreased non-fuel related operatingexpenses in the first six months of 2003 as compared to the same period of2002.  The potential refunds are based on results for each 12-monthperiod ended September 30.  Therefore, the financial results of thethird quarter of 2003 will impact the ultimate amounts to be refunded, ifany.  For additional information on the accrual for estimatedcustomer credits, see Note 8 - "Accrual for Estimated Customer Credits" in theNotes to the Unaudited Financial Statements in this Report.

24

----

*Energy Trading, Net*

          During thefirst six months of 2003 compared to the first six months of 2002, gas volumessold increased primarily due to trading activity in Cleco Power's gas portfoliobefore the fourth quarter of 2002, when speculative trading activities werediscontinued.  These volumes, along with the offsetting positions whichmitigated market and price risks, financially settled in the first six monthsof 2003.  Power volumes in the first six months of 2003 decreasedcompared to the first six months of 2002.  The decrease was directlyrelated to the discontinuation of speculative tradingactivities.  Most of Cleco Power's exposure to the market wasmitigated in the summer of 2002 by transactions that were entered into tospecifically offset open positions.  Volumes and associated revenuewere affected by these positions during the first six months of 2003 and areexpected to continue to be impacted by these positions through the thirdquarter of 2003.

          Generally, ClecoPower's energy trading transactions are considered non-hedging derivativesunder SFAS No. 133, as amended, which requires that the transactions bereported at fair market value or "marked-to-market."  The chart belowpresents the components of energy trading, net.

|                        | For the six months  ended June 30,                                  |
|------------------------|---------------------------------------------------------------------|
|                        | **2003**                                                            | 2002 | Variance | Change |
|                        | (Thousands)                                                         |
| Energy trading margins | **$   207     **            | $   968      | $   (761)     | (78.6)%  |
| Mark-to-market         | **     423     ** |      (60)     |       483      | *   |
| Energy trading, net    | **$   630     **            | $   908      | $   (278)     | (30.6)%  |
|                        |                                                                |   |   |  |
| ** Not meaningful*     |                                                                |   |   | * * |

          Energy trading, netdecreased $0.3 million, or 30.6%, in the first six months of 2003 compared tothe same period in 2002.  This was primarily due to a $1.2 milliondecrease as a result of Cleco Power's efforts to mitigate most of its exposureto the market following the discontinuation of speculative trading activitiesin the fourth quarter of 2002, partially offset by a $0.9 million increase as aresult of amounts required to be paid to Cleco Power pursuant to the ConsentAgreement.  For additional information on the Consent Agreement andFERC settlement, see Note 16 - "Subsequent Events - FERC Settlement" in theNotes to the Unaudited Financial Statements in this Report.

*Other Operations*

          Other operationsrevenue increased $1.9 million, or 14.7%, in the first six months of 2003compared to the same period of 2002 primarily due to an increase intransmission revenue.  The increase in transmission revenue waslargely a result of additional transmission services being provided to thetolling counterparties at Acadia, which commenced commercial operations in thethird quarter of 2002.

*Operating Expenses*

          Operating expensesincreased $39.6 million, or 18.2%, in the first six months of 2003 compared tothe same period of 2002.  Fuel used for electric generation increased$12.4 million, or 21.6%, primarily due to an increase in the average per unitcost of fuel from $2.22 per MMBtu in the first six months of 2002 to $3.26 perMMBtu in the same period of 2003.  Power purchased for utilitycustomers increased $29.5 million, or 42.2%, largely due to an increase in theaverage per unit cost of purchased power and an increase in capacitypayments.  The increase in power purchased for utility customers waspartially offset by a $1.1 million decrease resulting from the ConsentAgreement.  For additional information on the Consent Agreement andFERC settlement, see Note 16 - "Subsequent Events - FERC Settlement" in theNotes to the Unaudited Financial Statements in thisReport.  Increases in fuel used for electric generation and powerpurchased for utility customers both were influenced by higher natural gasprices.  Other operations expense decreased $2.7 million, or 8.9%,primarily due to reduced staff resulting from Cleco's 2002 organizationalrestructuring.  Depreciation expense increased $0.6 million, or 2.4%,as a result of normal recurring additions to fixed assets.

*Interest Income and Charges*

          Interest charges increased$0.8 million, or 5.8%, during the first six months of 2003 compared to the sameperiod of 2002 primarily due to interest accrued on new senior notes issued inApril 2003 and insured quarterly notes issued in May 2002.  Interestincome increased $0.3 million, or 118.6%, during the first six months of 2003compared to the same period of 2002 primarily due to the subsequent investmentof a portion of those funds.

25

----

          Income tax expensein the first six months of 2003 decreased $1.5 million, or 8.6%, compared tothe first six months of 2002.  Cleco Power's effective income taxrate for the first six months of 2003 decreased from 37.1% to 33.8% compared tothe first six months of 2002, largely due to the carryforward of a 2002 statenet operating loss, which greatly reduced current state income tax expense, ascomputed using the flow-through method of accounting for state income taxes, inaccordance with LPSC guidelines.  Contributing to the decrease in theeffective income tax rate was an adjustment related to an internal review of accumulateddeferred income taxes.  Income tax projections for future yearsindicate that the effective income tax rate will return to a level morecomparable to the 2002 rate, even though recent accounting method changes willcontinue to favorably impact income tax expense in 2003.  Forinformation about assumptions and estimates underlying Cleco Power's accountingfor the effect of income taxes, see "Item 2 Management's Discussion andAnalysis of Financial Condition and Results of Operations - Financial Condition- Critical Accounting Policies" in this Report.

***Midstream***

 

|                                                  |                                                      |                                           |                                                                         | For the six months ended June 30,                 |
|--------------------------------------------------|------------------------------------------------------|-------------------------------------------|-------------------------------------------------------------------------|---------------------------------------------------|
|                                                  |                                                      |                                           |                                                                         | **2003**                                          | ** ** | 2002 | ** ** | Variance |   | Change |
|                                                  |                                                      |                                           |                                                                         | (Thousands)                                       |  |  |
|                                                  |                                                      |                                           |                                                                         |                                                   |  |  |  |  |  |  |
| Operating revenue                                |                                                      |                                           |                                                                         |                                                   |  |  |  |
|                                                  | Tolling operations                                   | **$    51,809 ** |                                                                         | $      25,494  |  | $    26,315  |  | 103.2 % |
|                                                  | Energy trading, net                                  | **(2,186)**                               |                                                                         | 2,887                                        |  | (5,073) |  | *  |
|                                                  | Energy operations                                    | **38,014 **                          |                                                                         | 15,614                                       |  | 22,400  |  | 143.5 % |
|                                                  | Other operations                                     | **223 **                             |                                                                         | 3,964                                        |  | (3,741) |  | (94.4)% |
|                                                  | Intercompany revenue                                 | **201 **                             |                                                                         | 3,213                                        |  | (3,012) |  | (93.7)% |
|                                                  |                                                      | Total operating revenue                   | **88,061 **                                                        |                                                   | 51,172  |  | 36,889  |  | 72.1 % |
|                                                  |                                                      |                                           |                                                                         |                                                   |  |  |  |  |  |  |
| Operating expenses                               |                                                      |                                           |                                                                         |                                                   |  |  |  |
|                                                  | Purchases for energy  operations                     | **35,641 **                          |                                                                         | 13,193                                       |  | 22,448  |  | 170.2 % |
|                                                  | Other operations                                     | **15,755 **                          |                                                                         | 15,521                                       |  | 234  |  | 1.5 % |
|                                                  | Maintenance                                          | **4,731 **                           |                                                                         | 3,994                                        |  | 737  |  | 18.5 % |
|                                                  | Depreciation                                         | **15,152 **                          |                                                                         | 4,215                                        |  | 10,937  |  | 259.5 % |
|                                                  | Impairment of long-lived assets                      | **134,773 **                         |                                                                         | -                                            |  | 134,773  |  | *  |
|                                                  | Taxes other than income taxes                        | **212 **                             |                                                                         | 897                                          |  | (685) |  | (76.4)% |
|                                                  |                                                      | Total operating expenses                  | **206,264 **                                                       |                                                   | 37,820  |  | 168,444  |  | 445.4 % |
|                                                  |                                                      |                                           |                                                                         | ** **                                        |  |  |  |  |  |  |
| Operating income (loss)                          | **$(118,203)**                                       |                                           | $      13,352                        |                                                   | $(131,555) |  | *  |
|                                                  |                                                      |                                           |                                                                         |                                                   |  |  |  |  |  |  |
| Equity income from investees                     | **$    15,583 **            |                                           | $        1,359             |                                                   | $    14,224  |  | *  |
| Other income (expense), net                      | **$       (815)** |                                           | $           (21) |                                                   | $       (794) |  | *  |
| Interest charges                                 | **$    20,748 **            |                                           | $      10,500                        |                                                   | $    10,248  |  | 97.6 % |
| Federal and state income taxes (benefit) expense | **$  (47,317)**                            |                                           | $        1,273             |                                                   | $  (48,590) |  | *  |
| Net income (loss) applicable to member's equity  | **$  (76,404)**                            |                                           | $        3,108             |                                                   | $  (79,512) |  | *  |
|                                                  |                                                      |                                           |                                                                         |                                                   |  |  |  |  |  |  |
| ** Not meaningful*                               | * *                                             | * *                                  | * *                                                                | * *                                          | * * | * * | * * |

          Midstream's netloss applicable to member's equity for the first six months of 2003 was $76.4million, significantly below the $3.1 million earned in the same period of2002.  Factors contributing to this decrease include:

| -   | impairment of long-lived assets,   |
|----------|------------------------------------|
| -   | lower margins from energy trading, |
| -   | higher other operations expense,   |
| -   | higher depreciation expense,       |
| -   | higher interest charges, and       |
| -   | higher effective income tax rate.  |

These were partially offset by:

| -   | higher tolling revenue and           |
|----------|--------------------------------------|
| -   | higher equity income from investees. |

26

----

*Tolling Operations*

          Tolling operationsrevenue increased $26.3 million, or 103.2%, in the first six months of 2003compared to the first six months of 2002 primarily due to the Perryvillefacility commencing full commercial operations in the third quarter of2002.  This increase was partially offset by decreased generationfrom the Evangeline facility, which was dispatched less frequently in the firstsix months of 2003 compared to the first six months of 2002.

*Energy Trading, Net*

          For the first sixmonths of 2003 compared to the same period of 2002, decreases in power and gasvolumes were directly related to the discontinuation of Midstream's speculativetrading activities in the fourth quarter of 2002.  Most of Midstream'sexposure to the market from positions opened prior to the change in itsspeculative trading strategy was mitigated in the fourth quarter of 2002 bytransactions that were entered into to specifically offset openpositions.  Volumes and associated revenue were affected by these positionsduring the first six months of 2003 and are expected to continue to be impactedby these positions through the fourth quarter of 2003.

          Generally,Midstream's energy trading transactions are considered non-hedging derivativesunder SFAS No. 133, as amended, which requires that the transactions bereported at fair market value or "marked-to-market."  The chart belowpresents the components of energy trading, net.

|                        | For the six months  ended June 30,                                          |
|------------------------|-----------------------------------------------------------------------------|
|                        | **2003**                                                                    | 2002 | Variance | Change |
|                        | (Thousands)                                                                 |
| Energy trading margins | **$   (1,971)    **                      | $    (318)    | $  (1,653)   | (519.8)%  |
| Mark-to-market         | **       (215)    ** |     3,205     |    (3,420)   | *   |
| Energy trading, net    | **$   (2,186)    **                      | $  2,887     | $  (5,073)   | *   |
|                        |                                                                        |   |   |  |
| ** Not meaningful*     |                                                                        |   |   | * * |

          Energy trading, netdecreased $5.1 million in the first six months of 2003 compared to the sameperiod of 2002.  The decrease was primarily due to thediscontinuation of Midstream's speculative trading activities in late 2002, aswell as amounts required to be paid to Cleco Power under the ConsentAgreement.  For additional information on the Consent Agreement andFERC settlement, see Note 16 - "Subsequent Events - FERC Settlement" in theNotes to the Unaudited Financial Statements in this Report.

*Energy Operations*

          The $22.4 million,or 143.5%, increase in energy operations revenue during the first six months of2003 compared to the same period of 2002 was primarily due to increases in theaverage per unit cost of natural gas and volumes of natural gas marketed byCleco Energy to third parties.  In 2002, Cleco Energy sold gasproduction to Marketing & Trading as a part of its speculative tradingportfolio, which included trading physical gas.  These affiliatetransactions were previously eliminated from consolidated Midstream results andare not reflected in the charts below.  Due to Marketing &Trading's discontinuation of speculative trading, Cleco Energy was able tomarket more physical gas to third parties in 2003.  This increase inrevenues to third parties is reflected in the wholesale natural gas marketedsection below, which was somewhat offset by the loss of oneproducer.  Energy management services revenue increased $0.1 millionfor the first six months of 2003 compared to the same period of 2002 primarilydue to increased energy management services.  In May 2003, Marketing& Trading terminated all of its energy management servicescontracts.  Intercompany volume and revenue within Midstreamsubsidiaries have been eliminated and therefore are not reflected in the chartsbelow.  The chart below presents the components of energy operationsrevenue.

|                                                 | For the six months ended June 30,                                    |
|-------------------------------------------------|----------------------------------------------------------------------|
|                                                 | **2003**                                                             | 2002 | Variance | Change |
|                                                 | (Thousands)                                                          |  |
| Energy management  services                     | **$       606   ** | $       514    | $         92    | 17.9 %   |
| Wholesale natural gas  marketed.                | **    37,408   **                 |     15,100    |     22,308    | 147.7 %   |
|      Energy operations | **$  38,014   **                            | $  15,614    | $  22,400    | 143.5 %   |

27

----

          Thechart below presents a summary of energy management kWh and natural gasmarketed during the first six months of 2003 and 2002.

|                                 | For the six months  ended June 30,          |
|---------------------------------|---------------------------------------------|
|                                 | **2003**                                    | 2002 | Change |
| Energy management (million kWh) | **493     **       | 173      | 185.0 %   |
| Natural gas (MMBtu)             | **6,684,206     ** | 4,400,914      | 51.9 %   |

*Other Operations*

          Other operationsrevenue decreased $3.7 million, or 94.4%, in the first six months of 2003compared to the same period of 2002 primarily due to a change in the accountingtreatment of Midstream's power plant operations, maintenance, and engineeringservices that were provided to Perryville.  For additionalinformation on the change in accounting treatment of these services, see - "Comparisonof the Three Months Ended June 30, 2003 and 2002 - Midstream - Other Operations".

*Intercompany Revenue*

          Intercompanyrevenue decreased $3.0 million, or 93.7%, in the first six months of 2003compared to the same period of 2002.  The decrease was primarily dueto lower volumes of affiliate transactions combined with a significantlyreduced gas transportation rate charged to an affiliate.

*Operating Expenses*

          Purchases forenergy operations increased $22.4 million, or 170.2%, in the first six monthsof 2003 compared to the same period of 2002 primarily due to the same factorsaffecting energy operations revenue.  Other operations expense increased$0.2 million, or 1.5%, during the first six months of 2003 compared to the sameperiod in 2002 primarily due to increased expenses associated with thecommencement of the Perryville facility's full commercial operations in thethird quarter of 2002.  Also contributing to the increase was $6.3million of reserves recorded at Perryville at June 30, 2003, to reflect potential uncollectible MAEM receivables, as a result of Mirant and certain of itsaffiliates filing a voluntary petition for reorganization under Chapter 11 ofthe U.S. Bankruptcy Code on July 14, 2003.  For additionalinformation on Mirant's bankruptcy, see Note 16 - "Subsequent Events - MirantBankruptcy" in the Notes to the Unaudited Financial Statements in thisReport.  Partially offsetting these increases were decreased otheroperations expense as a result of Midstream's reduced participation inunregulated energy markets, including wholesale generation asset development,project analytics, energy marketing and trading activities, and power plantmaintenance and engineering services.  Maintenance expenses increased$0.7 million, or 18.5%, in the first six months of 2003 compared to the sameperiod in 2002 primarily due to the commencement of the Perryville facility'sfull commercial operations in the third quarter of 2002 and increased expensesat Evangeline due to earlier than planned replacement of combustion turbineparts and certain repairs on the combustion turbines under the LTPAgreement.  The $10.9 million, or 259.5%, increase in depreciationexpense was largely due to a $5.3 million increase at Perryville following thecompletion of construction of the Perryville facility in the third quarter of2002 and a $5.8 million increase at Evangeline following design changes tocertain combustion turbine parts as provided under the LTP Agreement andreassessment of the useful life of combustion turbine parts.  Due tothe reassessment of the useful life of combustion turbine parts at Evangeline,depreciation expense is expected to continue to reflect a slight increase whencompared to 2002.  A $134.8 million charge for impairment oflong-lived assets at Perryville was the principal cause of the significantincrease in operating expenses.  This charge was incurred during thefirst six months of 2003, whereas no such charge was incurred during the firstsix months of 2002.  For additional information on this charge, seeNote 15 - "Impairment of Long-Lived Assets" in the Notes to the UnauditedFinancial Statements in this Report.  The $0.7 million, or 76.4%,decrease in taxes other than income taxes during the first six months of 2003compared to the same period of 2002 was primarily the result of state franchisetax adjustments made during 2003 relating to 2002 and decreased payroll taxesas a result of the transfer of employees to other affiliates.

*Equity Income from Investees*

          Equity income frominvestees increased $14.2 million for the first six months of 2003 compared tothe first six months of 2002 primarily due to increased equity earnings from Acadiaas a result of the facility beginning commercial operations in the thirdquarter of 2002.  For additional information on Acadia, see Note 4 - "EquityInvestment in Investees" in the Notes to the Unaudited Financial Statements inthis Report.

28

----

*Other Income (Expense), Net*

          Other income (expense),net increased $0.8 million during the first six months of 2003 compared to thesame period of 2002 primarily due to the accrual of a $0.8 million civilpenalty agreed to in the Consent Agreement.  For additionalinformation on the Consent Agreement, see Note 16 - "Subsequent Events - FERCSettlement" in the Notes to the Unaudited Financial Statements in this Report.

*Interest Charges*

          Interest charges increased$10.2 million, or 97.6%, during the first six months of 2003 compared to thefirst six months of 2002 primarily due to a change in the treatment ofinterest-related expenses associated with Midstream's asset developmentactivity.  Prior to the third quarter of 2002 commencement ofcommercial operations at Perryville and Acadia, interest related to these projectswas capitalized in accordance with SFAS No. 58.

*Income Taxes*

          Income tax expensefor the first six months of 2003 decreased $48.6 million, providing a net taxbenefit of $47.3 million, compared to the first six months of2002.  Midstream's effective income tax rate for the first six monthsof 2003 increased to 38.2% from 29.1% compared to the first six months of 2002.  Theincrease in the effective income tax rate was largely due to a loss recognizedby Perryville as a result of a $134.8 million impairment charge recorded in thefirst six months of 2003 combined with a non-tax deductible civil penalty of $0.8million payable to the FERC in accordance with the ConsentAgreement.  Adding to the variance was the impact of a favorabletrue-up amount recorded during the first six months of 2002 to reflect IRSaudit adjustments.  For information on the impairment charge, see Note15 - "Impairment of Long-Lived Assets" and for information on the ConsentAgreement and FERC settlement, see Note 16 - "Subsequent Events - FERCSettlement" in the Notes to the Unaudited Financial Statements in thisReport.  For information about the assumptions and estimatesunderlying Midstream's accounting for the effect of income taxes, see "Item 2Management's Discussion and Analysis of Financial Condition and Results ofOperations - Financial Condition - Critical Accounting Policies" in this Report.

29

----

**CLECO POWER LLCPART I - FINANCIAL INFORMATION**

**ITEM 1**          **FINANCIALSTATEMENTS**

          Thefinancial statements of Cleco Power have been prepared pursuant to the rulesand regulations of the SEC.  Certain information and note disclosuresnormally included in financial statements prepared in accordance withaccounting principles generally accepted in the United States of America havebeen condensed or omitted pursuant to such rules and regulations, althoughCleco Power believes that the disclosures are adequate to make the informationpresented not misleading.  These financial statements should be readin conjunction with Cleco Power's Financial Statements and the Notes includedin the Registrants' Combined Annual Report on Form 10-K for the year endedDecember 31, 2002.

          The unauditedfinancial information included in the following financial statements reflectsall adjustments of a normal recurring nature which are, in the opinion ofmanagement of Cleco Power, necessary for a fair presentation of the financial position and the results of operations for theinterim periods.  Information for interim periods is affected byseasonal variations in sales, rate changes, timing of fuel expense recovery andother factors, and is not necessarily indicative of the results that may beexpected for the full fiscal year.

30

----

| ** **                                                                                                           |                                                             |          |                                       |
|----------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------|----------|---------------------------------------|
| **CLECO POWER LLC  STATEMENTS OF INCOME  For the three months ended June 30,  (UNAUDITED)**                          |
| ** **                                                                                                           | **2003**                                                    |          | 2002                                  |
| ** **                                                                                                           | (Thousands)                                                 |
| **Operating revenue**                                                                                                |                                                             |          |                                       |
|      Electric  operations                                                                   | **$     171,267 **            |          | $   141,322       |
|      Energy  trading, net                                                                   | **839 **                                               |          | 1,036                            |
|      Other  operations                                                                      | **7,984 **                                             |          | 6,782                            |
|      Intercompany  revenue                                                                  | **541 **                                               |          | 540                              |
|           Gross  operating revenue                                 | **180,631 **                                           |          | 149,680                          |
|                Electric  customer credits | **(8,500)**                                                 |          | (1,225)                               |
|           Total  operating revenue                                 | **172,131 **                                           |          | 148,455                          |
|                                                                                                                      | ** **                                                  |          |                                       |
| **Operating expenses**                                                                                               | ** **                                                  |          |                                       |
|      Fuel  used for electric generation                                                     | **36,855 **                                            |          | 30,678                           |
|      Power  purchased for utility customers                                                 | **56,746 **                                            |          | 37,769                           |
|      Other  operations                                                                      | **15,087 **                                            |          | 16,745                           |
|      Maintenance                                                                            | **8,744 **                                             |          | 9,528                            |
|      Depreciation                                                                           | **13,354 **                                            |          | 13,255                           |
|      Taxes  other than income taxes                                                         | **9,399 **                                             |          | 9,374                            |
|           Total  operating expenses                                | **140,185 **                                           |          | 117,349                          |
|                                                                                                                      | ** **                                                  |          |                                       |
| **Operating income**                                                                                                 | **31,946 **                                            |          | 31,106                           |
|                                                                                                                      | ** **                                                  |          |                                       |
| Interest income                                                                                                      | **283 **                                               |          | 181                              |
| Allowance for other  funds used during construction                                                                  | **717 **                                               |          | 512                              |
| Other expense, net                                                                                                   | **(812)**                                                   |          | 61                               |
|                                                                                                                      | ** **                                                  |          |                                       |
| **Income before  interest charges**                                                                                  | **32,134 **                                            |          | 31,860                           |
|                                                                                                                      | ** **                                                  |          |                                       |
| **Interest charges**                                                                                                 | ** **                                                  |          |                                       |
|      Interest  charges, including amortization of debt expenses, premium and discount       | **7,551 **                                             |          | 7,267                            |
|      Allowance  for borrowed funds used during construction                                 | **(151)**                                                   |          | (266)                                 |
|           Total  interest charges                                  | **7,400 **                                             |          | 7,001                            |
|                                                                                                                      | ** **                                                  |          |                                       |
| **Net income before  income taxes**                                                                                  | **24,734 **                                            |          | 24,859                           |
|                                                                                                                      | ** **                                                  |          |                                       |
| Federal and state  income taxes                                                                                      | **9,481 **                                             |          | 9,478                            |
|                                                                                                                      | ** **                                                  |          |                                       |
| **Net income  applicable to member's equity**                                                                        | **$       15,253 ** |          | $     15,381 |
|                                                                                                                      | ** **                                                  |          |                                       |
| *The accompanying notes are an integral part of the  financial statements.*                                          | * *                                                    | * * | * *                              |

 31

----

| ** **                                                                                                           |                                                                                     |          |                                                         |
|----------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------|----------|---------------------------------------------------------|
| **CLECO POWER LLC  STATEMENTS OF INCOME  For the six months ended June 30,  (UNAUDITED)**                            |
| ** **                                                                                                           | **2003**                                                                            |          | 2002                                                    |
| ** **                                                                                                           | (Thousands)                                                                         |
| **Operating revenue**                                                                                                |                                                                                     |          |                                                         |
|      Electric  operations                                                                   | **$         310,134 **            |          | $    263,284                   |
|      Energy  trading, net                                                                   | **630 **                                                                       |          | 908                                                |
|      Other  operations                                                                      | **15,179 **                                                                    |          | 13,231                                             |
|      Intercompany  revenue                                                                  | **1,102 **                                                                     |          | 974                                                |
|           Gross  operating revenue                                 | **327,045 **                                                                   |          | 278,397                                            |
|                Electric  customer credits | **(9,411)**                                                                         |          | (1,575)                                                 |
|           Total  operating revenue                                 | **317,634 **                                                                   |          | 276,822                                            |
|                                                                                                                      | ** **                                                                          |          |                                                         |
| **Operating expenses**                                                                                               | ** **                                                                          |          |                                                         |
|      Fuel  used for electric generation                                                     | **69,598 **                                                                    |          | 57,237                                             |
|      Power  purchased for utility customers                                                 | **99,341 **                                                                    |          | 69,872                                             |
|      Other  operations                                                                      | **27,467 **                                                                    |          | 30,151                                             |
|      Maintenance                                                                            | **15,496 **                                                                    |          | 15,611                                             |
|      Depreciation                                                                           | **26,596 **                                                                    |          | 25,980                                             |
|      Taxes  other than income taxes                                                         | **18,539 **                                                                    |          | 18,618                                             |
|           Total  operating expenses                                | **257,037 **                                                                   |          | 217,469                                            |
|                                                                                                                      | ** **                                                                          |          |                                                         |
| **Operating income**                                                                                                 | **60,597 **                                                                    |          | 59,353                                             |
|                                                                                                                      | ** **                                                                          |          |                                                         |
| Interest income                                                                                                      | **634 **                                                                       |          | 290                                                |
| Allowance for other  funds used during construction                                                                  | **1,627 **                                                                     |          | 922                                                |
| Other expense, net                                                                                                   | **(1,437)**                                                                         |          | (145)                                                   |
|                                                                                                                      | ** **                                                                          |          |                                                         |
| **Income before  interest charges**                                                                                  | **61,421 **                                                                    |          | 60,420                                             |
|                                                                                                                      | ** **                                                                          |          |                                                         |
| **Interest charges**                                                                                                 | ** **                                                                          |          |                                                         |
|      Interest  charges, including amortization of debt expenses, premium and discount       | **14,677 **                                                                    |          | 14,008                                             |
|      Allowance  for borrowed funds used during construction                                 | **(356)**                                                                           |          | (470)                                                   |
|           Total  interest charges                                  | **14,321 **                                                                    |          | 13,538                                             |
|                                                                                                                      | ** **                                                                          |          |                                                         |
| **Net income before  income taxes**                                                                                  | **47,100 **                                                                    |          | 46,882                                             |
|                                                                                                                      | ** **                                                                          |          |                                                         |
| Federal and state  income taxes                                                                                      | **15,909 **                                                                    |          | 17,403                                             |
|                                                                                                                      | ** **                                                                          |          |                                                         |
| **Net income  applicable to member's equity**                                                                        | **$           31,191 ** |          | $       29,479  |
|                                                                                                                      | ** **                                                                          |          |                                                         |
| *The accompanying notes are an integral part of the  financial statements.*                                          | * *                                                                            | * * | * *                                                |

32

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| ** **                                                                                                                                                                                                                                                               | ** **                                                     |          |                                          |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------|----------|------------------------------------------|
| **CLECO POWER LLC  BALANCE SHEETS   (UNAUDITED)**                                                                                                                                                                                                                        |
| ** **                                                                                                                                                                                                                                                               | **At  June 30,   2003**                                        |          | At   December 31,   2002                 |
| ** **                                                                                                                                                                                                                                                               | (Thousands)                                                    |
| **Assets**                                                                                                                                                                                                                                                               | ** **                                                     |          |                                          |
|      Utility  plant and equipment                                                                                                                                                                                                               | ** **                                                     |          |                                          |
|           Property,  plant and equipment                                                                                                                                                                               | **$       1,655,864 ** |          | $    1,617,254  |
|           Accumulated  depreciation                                                                                                                                                                                    | **(708,140)**                                                  |          | (680,305)                                |
|           Net  property, plant and equipment                                                                                                                                                                           | **947,724 **                                              |          | 936,949                             |
|           Construction  work-in-progress                                                                                                                                                                               | **72,639 **                                               |          | 76,131                              |
|                Total  utility plant, net                                                                                                                                                      | **1,020,363 **                                            |          | 1,013,080                           |
|                                                                                                                                                                                                                                                                          | ** **                                                     |          |                                          |
|      Current  assets                                                                                                                                                                                                                            | ** **                                                     |          |                                          |
|           Cash  and cash equivalents                                                                                                                                                                                   | **33,620 **                                               |          | 69,167                              |
|           Customer  accounts receivable (less allowance for doubtful accounts of                  $859 in  2003 and $846 in 2002) | **34,686 **                                               |          | 25,467                              |
|           Other  accounts receivable                                                                                                                                                                                   | **22,744 **                                               |          | 23,553                              |
|           Accounts  receivable - affiliates                                                                                                                                                                            | **3,595 **                                                |          | 9,296                               |
|           Taxes  receivable                                                                                                                                                                                            | **- **                                                    |          | 18,123                              |
|           Unbilled  revenue                                                                                                                                                                                            | **18,948 **                                               |          | 15,996                              |
|           Fuel  inventory, at average cost                                                                                                                                                                             | **17,064 **                                               |          | 13,309                              |
|           Material  and supplies inventory, at average cost                                                                                                                                                            | **12,659 **                                               |          | 12,333                              |
|           Margin  deposits                                                                                                                                                                                             | **523 **                                                  |          | -                                   |
|           Risk  management assets                                                                                                                                                                                      | **1,671 **                                                |          | 67                                  |
|           Accumulated  deferred fuel                                                                                                                                                                                   | **5,713 **                                                |          | -                                   |
|           Accumulated  deferred federal and state income taxes, net                                                                                                                                                    | **2,365 **                                                |          | 3,652                               |
|           Other  current assets                                                                                                                                                                                        | **4,453 **                                                |          | 4,234                               |
|                Total  current assets                                                                                                                                                          | **158,041 **                                              |          | 195,197                             |
|                                                                                                                                                                                                                                                                          | ** **                                                     |          |                                          |
|      Prepayments                                                                                                                                                                                                                                | **8,675 **                                                |          | 8,733                               |
|      Regulatory  assets and liabilities - deferred taxes, net                                                                                                                                                                                   | **80,892 **                                               |          | 65,268                              |
|      Other  deferred charges                                                                                                                                                                                                                    | **58,016 **                                               |          | 56,167                              |
|                                                                                                                                                                                                                                                                          | ** **                                                     |          |                                          |
| **Total assets**                                                                                                                                                                                                                                                         | **$       1,325,987 ** |          | $    1,338,445  |
|                                                                                                                                                                                                                                                                          | ** **                                                     |          |                                          |
| *The accompanying notes are an integral part of the  financial statements.*                                                                                                                                                                                              | *** ***                                                   | * * | * *                                 |
|                                                                                                                                                                                                                                                                          | ** **                                                     |          |                                          |
| *(continued on next page)*                                                                                                                                                                                                                                               | *** ***                                                   | * * | * *                                 |

33

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| ** **                                                                              | ** **                                                                     |          |                                              |
|-----------------------------------------------------------------------------------------|--------------------------------------------------------------------------------|----------|----------------------------------------------|
| **CLECO POWER LLC  BALANCE SHEETS (Continued)  (UNAUDITED)**                            |
| ** **                                                                              | **At  June 30,   2003**                                                        |          | At   December 31,   2002                     |
| ** **                                                                              | (Thousands)                                                                    |
| **Liabilities and  capitalization**                                                     | ** **                                                                     |          |                                              |
|      Member's  equity                                          | **$          425,421 ** |          | $     424,695  |
|      Other  comprehensive income                               | **(914)**                                                                      |          | (914)                                        |
|      Long-term  debt                                           | **410,546 **                                                              |          | 335,517                                 |
|                                                                                         | ** **                                                                     |          |                                              |
|           **Total  capitalization**   | **835,053 **                                                              |          | 759,298                                 |
|                                                                                         | ** **                                                                     |          |                                              |
| Current liabilities                                                                     | ** **                                                                     |          |                                              |
|      Short-term  debt                                          | **- **                                                                    |          | 107,000                                 |
|      Long-term  debt due within one year                       | **- **                                                                    |          | 25,000                                  |
|      Accounts  payable                                         | **52,446 **                                                               |          | 63,108                                  |
|      Accounts  payable - affiliates                            | **6,506 **                                                                |          | 9,161                                   |
|      Customer  deposits                                        | **21,182 **                                                               |          | 21,069                                  |
|      Taxes  accrued                                            | **36,615 **                                                               |          | -                                       |
|      Interest  accrued                                         | **7,865 **                                                                |          | 7,725                                   |
|      Accumulated  deferred fuel                                | **- **                                                                    |          | 3,509                                   |
|      Risk  management liabilities                              | **- **                                                                    |          | 1,935                                   |
|      Other  current liabilities                                | **2,062 **                                                                |          | 2,779                                   |
|           Total  current liabilities  | **126,676 **                                                              |          | 241,286                                 |
|                                                                                         | ** **                                                                     |          |                                              |
| Deferred credits                                                                        | ** **                                                                     |          |                                              |
|      Accumulated  deferred federal and state income taxes, net | **291,731 **                                                              |          | 274,205                                 |
|      Accumulated  deferred investment tax credits              | **19,880 **                                                               |          | 20,744                                  |
|      Other  deferred credits                                   | **52,647 **                                                               |          | 42,912                                  |
|           Total  deferred credits     | **364,258 **                                                              |          | 337,861                                 |
|                                                                                         | ** **                                                                     |          |                                              |
| **Total liabilities  and capitalization**                                               | **$       1,325,987 **                 |          | $   1,338,445            |
|                                                                                         | ** **                                                                     |          |                                              |
| *The accompanying notes are an integral part of the  financial statements.*             | *** ***                                                                   | * * | * *                                     |

34

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|                                                                                                                                                                      |                                                                                |       |                                                                     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------|
| **CLECO POWER LLC  STATEMENTS OF CASH FLOWS  For the six months ended June 30,  (UNAUDITED)**                                                                        |
|                                                                                                                                                                      | **2003**                                                                            | ** ** | 2002                                                                     |
|                                                                                                                                                                      | (Thousands)                                                                         |
| **Operating activities**                                                                                                                                             |                                                                                     |            |                                                                          |
|      Net  income applicable to member's equity                                                                                              | **$           31,191 ** |            | $        29,479             |
|      Adjustments  to reconcile net income to net cash provided by operating activities:                                                     | ** **                                                                          |            |                                                                          |
|                Depreciation  and amortization                                             | **27,350 **                                                                    |            | 26,406                                                              |
|                Provision  for doubtful accounts                                           | **500 **                                                                       |            | 375                                                                 |
|                Allowance  for other funds used during construction                        | **(1,627)**                                                                         |            | (922)                                                                    |
|                Amortization  of investment tax credits                                    | **(864)**                                                                           |            | (871)                                                                    |
|                Net  deferred income taxes                                                 | **2,313 **                                                                     |            | 1,110                                                               |
|                Deferred  fuel costs                                                       | **(9,272)**                                                                         |            | (3,003)                                                                  |
|                Changes  in assets and liabilities:                                        | ** **                                                                          |            |                                                                          |
|                     Accounts  receivable                         | **(8,910)**                                                                         |            | (18,214)                                                                 |
|                     Accounts  and notes receivable, affiliate    | **5,701 **                                                                     |            | 380                                                                 |
|                     Unbilled  revenue                            | **(2,952)**                                                                         |            | (4,239)                                                                  |
|                     Fuel,  materials and supplies inventory      | **(4,081)**                                                                         |            | (38)                                                                     |
|                     Prepayments                                  | **58 **                                                                        |            | (384)                                                                    |
|                     Accounts  payable                            | **(10,662)**                                                                        |            | (16,289)                                                                 |
|                     Accounts  payable, affiliate                 | **(2,620)**                                                                         |            | 656                                                                 |
|                     Customer  deposits                           | **113 **                                                                       |            | 310                                                                 |
|                     Other  deferred accounts                     | **7,848 **                                                                     |            | 3,397                                                               |
|                     Taxes  accrued                               | **54,738 **                                                                    |            | 25,151                                                              |
|                     Interest  accrued                            | **140 **                                                                       |            | 824                                                                 |
|                     Margin  deposits                             | **(523)**                                                                           |            | (283)                                                                    |
|                     Risk  management assets and liabilities, net | **(3,489)**                                                                         |            | 93                                                                  |
|                     Other,  net                                  | **(936)**                                                                           |            | 358                                                                 |
|           Net  cash provided by operating activities                                                               | **84,016 **                                                                    |            | 44,296                                                              |
| **Investing activities**                                                                                                                                             | ** **                                                                          |            |                                                                          |
|      Additions  to property, plant and equipment                                                                                            | **(33,392)**                                                                        |            | (34,784)                                                                 |
|      Allowance  for other funds used during construction                                                                                    | **1,627 **                                                                     |            | 922                                                                 |
|      Proceeds  from sale of property, plant and equipment                                                                                   | **259 **                                                                       |            | 281                                                                 |
|           Net  cash used in investing activities                                                                   | **(31,506)**                                                                        |            | (33,581)                                                                 |
| **Financing activities**                                                                                                                                             | ** **                                                                          |            |                                                                          |
|      Change  in short-term debt, net                                                                                                        | **(107,000)**                                                                       |            | (51,792)                                                                 |
|      Retirement  of long-term obligations                                                                                                   | **(25,000)**                                                                        |            | -                                                                   |
|      Issuance  of long-term debt                                                                                                            | **75,000 **                                                                    |            | 75,000                                                              |
|      Deferred  financing costs                                                                                                              | **(557)**                                                                           |            | (3,775)                                                                  |
|      Distribution  to parent                                                                                                                | **(30,500)**                                                                        |            | (31,000)                                                                 |
|           Net  cash used in financing activities                                                                   | **(88,057)**                                                                        |            | (11,567)                                                                 |
| **Net decrease in cash  and cash equivalents**                                                                                                                       | **(35,547)**                                                                        |            | (852)                                                                    |
| **Cash and cash  equivalents at beginning of period**                                                                                                                | **69,167 **                                                                    |            | 3,123                                                               |
| **Cash and cash  equivalents at end of period**                                                                                                                      | **$           33,620 ** |            | $          2,271  |
| **Supplementary cash  flow information**                                                                                                                             | ** **                                                                          |            |                                                                          |
|      Interest  paid (net of amount capitalized)                                                                                             | **$           13,540 ** |            | $        17,262             |
|      Income  taxes paid/(refunded)                                                                                                          | **$         (22,005)**                 |            | $          2,906  |
|                                                                                                                                                                      |                                                                                     |            |                                                                          |
| *The accompanying notes are an integral part of the  financial statements.*                                                                                          |                                                                                     |            |

** **35

----

**CLECO POWER LLC - NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS**

          Set forth below isinformation concerning the results of operations of Cleco Power for the threemonths and six months ended June 30, 2003, and June 30, 2002.  The following narrative analysis should beread in combination with Cleco Power LLC's Unaudited Financial Statements andthe Notes contained in this Form 10-Q.

          Cleco Power meetsthe conditions specified in General Instructions H(1)(a) and (b) to Form 10-Qand is therefore permitted to use the reduced disclosure format for whollyowned subsidiaries of reporting companies.  Accordingly, Cleco Powerhas omitted from this report the information called for by Item 2 (Management'sDiscussion and Analysis of Financial Condition and Results of Operations) andItem 3 (Quantitative and Qualitative Disclosures About Market Risk) of Part Iof Form 10-Q and the following Part II items of Form 10-Q: Item 2 (Changes inSecurities and Use of Proceeds), Item 3 (Defaults Upon Senior Securities) andItem 4 (Submission of Matters to a Vote of SecurityHolders).  Pursuant to the General Instructions, Cleco Power hasincluded an explanation of the reasons for material changes in the amount ofrevenue and expense items of Cleco Power between the second quarter of 2003 andthe second quarter of 2002 and the first six months of 2003 and2002.  Reference is made to Management's Discussion and Analysis ofFinancial Condition and Results of Operations in Item 7 of the Registrants'Combined Annual Report on Form 10-K for the year ended December 31, 2002.

**          **For an explanation of material changes in theamount of revenue and expense items of Cleco Power between the second quarterof 2003 and the second quarter of 2002, see "Item1 Financial Statements - Cleco Corporation - Management's Discussion andAnalysis of Results of Operations - Comparison of the Three Months Ended June30, 2003 and 2002 - Cleco Power" ofthis Form 10-Q, which discussion is incorporated herein by reference.

**          **For an explanation of material changes in theamount of revenue and expense items of Cleco Power between the first six monthsof 2003 and the first six months of 2002, see "Item 1 Financial Statements -Cleco Corporation - Management's Discussion and Analysis of Results ofOperations - Comparison of the Six Months Ended June 30, 2003 and 2002 - ClecoPower" of this Form 10-Q, which discussion is incorporated herein by reference.

36**INDEX TO APPLICABLE NOTES TO THE FINANCIALSTATEMENTS OF REGISTRANTS**

| Note 1  | Reclassifications                                                                                                       | Cleco Corporation and Cleco Power |
|---------|-------------------------------------------------------------------------------------------------------------------------|-----------------------------------|
| Note 2  | Disclosures about Segments                                                                                              | Cleco Corporation                 |
| Note 3  | Restricted Cash                                                                                                         | Cleco Corporation                 |
| Note 4  | Equity Investment in Investees                                                                                          | Cleco Corporation                 |
| Note 5  | Review of Trading Activities                                                                                            | Cleco Corporation and Cleco Power |
| Note 6  | Recent Accounting Standards                                                                                             | Cleco Corporation and Cleco Power |
| Note 7  | Cumulative Change in  Accounting Principle - Accounting for        Asset Retirement Obligation | Cleco Corporation and Cleco Power |
| Note 8  | Accrual for Estimated Customer  Credits                                                                                 | Cleco Corporation and Cleco Power |
| Note 9  | Restructuring Charge                                                                                                    | Cleco Corporation and Cleco Power |
| Note 10 | Accounting for Stock-Based  Compensation - Transition and        Disclosure                    | Cleco Corporation                 |
| Note 11 | Securities Litigation  and Other Commitments and Contingencies                                                          | Cleco Corporation and Cleco Power |
| Note 12 | Disclosures about  Guarantees                                                                                           | Cleco Corporation and Cleco Power |
| Note 13 | Debt                                                                                                                    | Cleco Corporation and Cleco Power |
| Note 14 | Income Taxes                                                                                                            | Cleco Corporation and Cleco Power |
| Note 15 | Impairment of Long-Lived Assets                                                                                         | Cleco Corporation                 |
| Note 16 | Subsequent Events                                                                                                       | Cleco Corporation and Cleco Power |

**NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)**

**Note 1 - Reclassifications**

          Certain financialstatement items from prior periods have been reclassified to conform to thecurrent year's presentation.  These reclassifications had no effecton net income or shareholders' (member's) equity.

**Note 2 - Disclosures about Segments**

          Cleco hasdetermined that its reportable segments are based on Cleco's method of internalreporting, which disaggregates its business units by second-tiersubsidiary.  Reportable segments were determined by applying SFAS No.131.  Cleco's reportable segments are Cleco Power, Midstream, and Other.  The Other segment consists of the parent company, a shared servicessubsidiary, an investment subsidiary and the discontinued operations of UTS.  The Other segment subsidiaries operate within Louisiana and Delaware.

          Each reportable segment engages in business activities from which itearns revenue and incurs expenses.  Segment managers reportperiodically to Cleco's Chief Executive Officer (the chief decision-maker) withdiscrete financial information and, at least quarterly, present discretefinancial information to Cleco's Board of Directors.  Each reportablesegment prepared budgets for 2003 that were presented to and approved by Cleco'sBoard of Directors.  The reportable segments exceeded the quantitative thresholds as defined in SFAS No. 131.

         The financialresults of Cleco's segments are presented on an accrualbasis.  Management evaluates the performance of its segments andallocates resources to them based on segment profit (loss) before preferredstock dividends.  Material intersegment transactions occur on aregular basis.

37 
          Thetables below present information about the reported operating results and netassets of Cleco's reportable segments.

**Segment  Information  For the quarter ended June 30,**

(Thousands)

**2003**

**ClecoPower**

**Midstream**

**Other**

**Unallocated  Items,  Reclassifications  & Eliminations**

**Consolidated**

Revenue

     Electric operations

**$**

**171,267 **

**$**

**- **

**$**

**- **

**$**

**- **

**$**

**171,267 **

     Tolling operations

** **

**- **

** **

**28,032 **

** **

**- **

** **

**- **

** **

**28,032 **

     Energy trading, net

** **

**839 **

** **

**(2,201)**

** **

**- **

** **

**1,284 **

** **

**(78)**

     Energy operations

** **

**- **

** **

**19,360 **

** **

**- **

** **

**- **

** **

**19,360 **

     Other operations

** **

**7,984 **

** **

**176 **

** **

**17 **

** **

**(222)**

** **

**7,955 **

     Electric customer credits

** **

**(8,500)**

** **

**- **

** **

**- **

** **

**- **

** **

**(8,500)**

     Intersegment revenue

** **

**541 **

** **

**126 **

** **

**10,482 **

** **

**(11,149)**

** **

**- **

Total operating revenue

**$**

**172,131 **

**$**

**45,493 **

**$**

**10,499 **

**$**

**(10,087)**

**$**

**218,036 **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

Depreciation expense

**$**

**13,354 **

**$**

**4,798 **

**$**

**274 **

**$**

**- **

**$**

**18,426 **

Impairment of long-lived assets

**$**

**- **

**$**

**134,773 **

**$**

**- **

**$**

**- **

**$**

**134,773 **

Interest charges

**$**

**7,400 **

**$**

**10,030 **

**$**

**4,570 **

**$**

**(3,678)**

**$**

**18,322 **

Interest income

**$**

**283 **

**$**

**327 **

**$**

**3,701 **

**$**

**(3,590)**

**$**

**721 **

Equity investment from investees

**$**

**- **

**$**

**7,787 **

**$**

**- **

**$**

**- **

**$**

**7,787 **

Federal and state income taxes       (benefit) expense

**$**

**9,481 **

**$**

**(49,076)**

**$**

**(1,057)**

**$**

**(73)**

**$**

**(40,725)**

Segment profit (loss) (1)  

**$**

**15,253 **

**$**

**(79,028)**

**$**

**(2,626)**

**$**

**- **

**$**

**(66,401)**

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

Segment assets

**$**

**1,325,987 **

**$**

**828,536 **

**$**

**616,718 **

**$**

**(614,725)**

**$**

**2,156,516 **

(1) Reconciliation of segment profit (loss) to consolidated profit:

** **

** **

** **

**Segment profit (loss)**

**$**

**(66,401)**

**Unallocated items**

** **

** **

**     Preferred dividends**

** **

**(457)**

**Net income (loss) applicable**

** **

** **

**     to common stock**

**$**

**(66,858)**

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

2002

ClecoPower

Midstream

Other

Unallocated  Items,  Reclassifications  & Eliminations

Consolidated

Revenue

     Electric operations

$

141,322 

$

- 

$

- 

$

- 

$

141,322 

     Tolling operations

- 

13,874 

- 

- 

13,874 

     Energy trading, net

1,036 

1,749 

- 

3 

2,788 

     Energy operations

- 

7,007 

- 

- 

7,007 

     Other operations

6,782 

3,594 

12 

(12)

10,376 

     Electric customer credits

(1,225)

- 

- 

- 

(1,225)

     Intersegment revenue

540 

1,943 

8,626 

(11,109)

- 

Total operating revenue

$

148,455 

$

28,167 

$

8,638 

$

(11,118)

$

174,142 

Depreciation expense

$

13,255 

$

2,143 

$

298 

$

- 

$

15,696 

Interest charges

$

7,001 

$

5,275 

$

3,661 

$

(3,169)

$

12,768 

Interest income

$

181 

$

87 

$

3,146 

$

(3,110)

$

304 

Equity investment from investees

$

- 

$

788 

$

- 

$

- 

$

788 

Federal and state income taxes       (benefit) expense

$

9,478 

$

991 

$

(905)

$

- 

$

9,564 

Segment profit (loss)  (1)

$

15,381 

$

2,684 

$

(283)

$

- 

$

17,782 

Segment assets

$

1,214,538 

$

910,692 

$

494,246 

$

(403,963)

$

2,215,513 

(1) Reconciliation of segment profit (loss) to consolidated profit:

** **

** **

** **

Segment profit

$

17,782 

Unallocated items

     Preferred dividends

(465)

Net income applicable

     to common stock

$

17,317 

38

 

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

**Segment  Information  For the six months ended June 30,**

(Thousands)

**2003**

** **

**Cleco  Power**

** **

**Midstream**

** **

**Other**

** **

**Unallocated  Items,  Reclassifications  & Eliminations**

** **

**Consolidated**

Revenue

     Electric operations

**$**

**310,134 **

**$**

**- **

**$**

**- **

**$**

**- **

**$**

**310,134 **

     Tolling operations

** **

**- **

** **

**51,809 **

** **

**- **

** **

**- **

** **

**51,809 **

     Energy trading, net

** **

**630 **

** **

**(2,186)**

** **

**- **

** **

**1,283 **

** **

**(273)**

     Energy operations

** **

**- **

** **

**38,014 **

** **

**- **

** **

**- **

** **

**38,014 **

     Other operations

** **

**15,179 **

** **

**223 **

** **

**46 **

** **

**(236)**

** **

**15,212 **

     Electric customer credits

** **

**(9,411)**

** **

**- **

** **

**- **

** **

**- **

** **

**(9,411)**

     Intersegment revenue

** **

**1,102 **

** **

**201 **

** **

**20,438 **

** **

**(21,741)**

** **

**- **

Total operating revenue

**$**

**317,634 **

**$**

**88,061 **

**$**

**20,484 **

**$**

**(20,694)**

**$**

**405,485 **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

Depreciation expense

**$**

**26,596 **

**$**

**15,152 **

**$**

**528 **

**$**

**1 **

**$**

**42,277 **

Impairment of long-lived assets

**$**

**- **

**$**

**134,773 **

**$**

**- **

**$**

**- **

**$**

**134,773 **

Interest charges

**$**

**14,321 **

**$**

**20,748 **

**$**

**8,100 **

**$**

**(7,329)**

**$**

**35,840 **

Interest income

**$**

**634 **

**$**

**461 **

**$**

**7,545 **

**$**

**(7,241)**

**$**

**1,399 **

Equity investment from investees

**$**

**- **

**$**

**15,583 **

**$**

**- **

**$**

**- **

**$**

**15,583 **

Federal and state income taxes       (benefit) expense

**$**

**15,909 **

**$**

**(47,317)**

**$**

**(961)**

**$**

**(117)**

**$**

**(32,486)**

Segment profit (loss) (1)  

**$**

**31,191 **

**$**

**(76,404)**

**$**

**(3,375)**

**$**

**- **

**$**

**(48,588)**

** **

** **

** **

** **

** **

** **

** **

** **

** **

Segment assets

**$**

**1,325,987 **

**$**

**828,536 **

**$**

**616,718 **

**$**

**(614,725)**

**$**

**2,156,516 **

(1) Reconciliation of segment profit (loss) to consolidated profit:

** **

** **

** **

**Segment profit (loss)**

**$**

**(48,588)**

**Unallocated items**

** **

** **

**     Preferred dividends**

** **

**(934)**

**Net income (loss) applicable**

** **

** **

**     to common stock**

**$**

**(49,522)**

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

** **

Unallocated

** **

** **

Items,

** **

** **

Cleco  

Reclassifications

2002

** **

Power

Midstream

Other

& Eliminations

Consolidated

Revenue

     Electric operations

$

263,284 

$

- 

$

- 

$

- 

$

263,284 

     Tolling operations

- 

25,494 

- 

- 

25,494 

     Energy trading, net

908 

2,887 

- 

4 

3,799 

     Energy operations

- 

15,614 

- 

- 

15,614 

     Other operations

13,231 

3,964 

32 

(25)

17,202 

     Electric customer credits

(1,575)

- 

- 

- 

(1,575)

     Intersegment revenue

974 

3,213 

14,857 

(19,044)

- 

Total operating revenue

$

276,822 

$

51,172 

$

14,889 

$

(19,065)

$

323,818 

Depreciation expense

$

25,980 

$

4,215 

$

449 

$

- 

$

30,644 

Interest charges

$

13,538 

$

10,500 

$

6,632 

$

(6,090)

$

24,580 

Interest income

$

290 

$

190 

$

6,068 

$

(6,020)

$

528 

Equity investment from investees

$

- 

$

1,359 

$

- 

$

- 

$

1,359 

Federal and state income taxes       (benefit) expense

$

17,403 

$

1,273 

$

(1,010)

$

- 

$

17,666 

Segment profit (loss)  (1)

$

29,479 

$

3,108 

$

(752)

$

- 

$

31,835 

Segment assets

$

1,214,538 

$

910,692 

$

494,246 

$

(403,963)

$

2,215,513 

(1) Reconciliation of segment profit (loss) to consolidated profit:

** **

** **

** **

Segment profit

$

31,835 

Unallocated items

     Preferred dividends

(937)

Net income applicable

     to common stock

$

30,898 

** **39

**Note 3 - RestrictedCash**

          Variousagreements to which Cleco is subject contain covenants that restrict its use ofcash.  As certain provisions under these agreements are met, cash istransferred out of related escrow accounts and becomes available for generalcorporate purposes.  At June 30, 2003, $28.8 million ofcash was restricted under the Evangeline senior secured bond indenture, $12.9million of cash was restricted at Perryville under the terms of the Senior LoanAgreement, and $1.8 million of APH's cash was restricted under the termsof the Midstream credit facility.  

**Note 4 - EquityInvestment in Investees**

          Equity investment in investees represents Midstream's$270.1 million investment in Acadia and Cleco Energy's$0.7 million investment in Hudson.  Midstream's portion of earnings from Acadia for the secondquarter of 2003, $7.8 million, is included in the $270.1 million equityinvestment in Acadia.  For the second quarter of 2003, no material earningsor losses were recorded for Hudson.

          Cleco reports its investment in Acadia on the equitymethod of accounting as defined in APB No. 18.

          The table belowpresents the components of Midstream's equity investment in Acadia.

At June 30, 2003

(Thousands)

Contributed assets (cash and land)

$  250,612         

Net income (inception to date)

30,446         

Capitalized interest and other

19,504         

     Less: Cash distributions

    (30,471)        

          Total equity investment in investee

$  270,091         

          Midstream's equity,as reported in the balance sheet of Acadia at June 30, 2003, was $250.6 million.  The difference of $19.5million between the equity investment in investee and Midstream's equity wasprimarily the interest capitalized on funds used to contribute to Acadia and othermiscellaneous charges related to the construction of the Acadia facility, asindicated in the table above.  The cash distributions of $30.5million were used to pay interest on debt at the parent company relating tothis investment and to reduce corporate debt associated with this investment.

          The table belowcontains unaudited summarized financial information for Acadia.  In May2003, Acadiaterminated its 580-MW, 20-year tolling agreement with Aquila Energy in returnfor a cash payment of $105.5 million from Aquila Energy.  Acadia made a $105.5million distribution to Calpine.  In exchange for this distribution,Calpine entered into a new 580-MW tolling contract with Acadia and assumed theoriginal ending date of the Aquila Energy tolling agreement, which is June 30, 2022.  Calpinewill now market all of the output from Acadia under the terms of this new contract and an existing20-year tolling agreement.  The Second Amended and Restated LimitedLiability Company Agreement of Acadia, dated as of May 9, 2003 provided for APH receivingpriority cash distributions and earnings as its consideration for therestructuring.  Also, Cleco will have more credit support availablein the event Calpine does not fulfill its obligations under either tollingagreement.  Calpine has posted letters of credit totaling $28.0million as of June 30, 2003.  An additional $12.0 million is required to beposted by the end of 2003, thereby increasing to $40.0 million the totalletters of credit to be issued by Calpine.  No income statementinformation is presented for the three months and six months ended June 30, 2002, when the Acadia facility was inthe construction phase and all costs were capitalized.

(Unaudited)

**At  June 30,****2003**

At December 31,   2002

(Thousands)

Current assets

**$    15,027    **

$    12,712    

Property, plant & equipment, net

**489,588    **

496,098    

Other assets

**        2,703    **

        2,468    

     Total assets

**$  507,318    **

$  511,278    

** **

Current liabilities

**$      4,087    **

$      4,208    

Partners' capital

**    503,231    **

    507,070    

** **

     Total liabilities and partners' capital.

**$  507,318    **

$  511,278    

** **

 

40
 
For the three months ended June 30,
   
For the six months ended June 30,

**2003**

2002
   
**2003**

2002

(Thousands)
   
(Thousands)

Total revenue

**$    21,397    **

$       -        
   
**$    44,050    **

$       -        

Termination agreement income

**105,500    **

-        
   
**105,500    **

-        

Total operating expenses

**       7,897    **

         -        
   
**      14,938    **

         -        

** **

 
   
** **

 

     Net income

**$  119,000    **

$       -        
   
**$  134,612    **

$       -        

          Cleco Energy owns 50% of Hudson, which indirectly owns and operates natural gas pipelinesin Louisiana.  Hudson also ownscontrolling interest in an entity that owns and operates a pipeline system in Texas.  Themember's equity as reported in the balance sheet was $0.7 million, which equalsthe equity investment at Cleco Energy.

**Note 5 - Review of Trading Activities**

          In the thirdquarter of 2002, Cleco began reviewing certain energy trading activities,including transactions between Cleco Power and certain Midstreamcompanies.  Cleco has determined that certain trading activities andother transactions may have violated the PUHCA, as well as various statutes andregulations administered by the FERC and the LPSC.

          Cleco has contactedthe appropriate regulatory authorities, including the staffs of the FERC andthe LPSC, and has held discussions with them concerning indirect sales of testpower by Evangeline to Cleco Power, a regulated affiliate utility, otherindirect acquisitions of purchased power by Cleco Power from Marketing &Trading, Cleco Power's indirect sales of power to Marketing & Trading, andother transactions between Cleco Power and Marketing &Trading.  These discussions have led to formal investigatoryproceedings by the FERC and the LPSC, with which Cleco has cooperated.  Theseproceedings have entailed discovery measures by the agencies with jurisdictionover the referenced energy trading transactions and energy trading transactionsin general between Cleco's power marketer subsidiaries.  At the sametime, Cleco conducted its own internal investigations of Cleco's subsidiaries'energy trading activities for regulatory compliance.  On July 25, 2003, the FERC issued its order approving the Consent Agreement between FERCStaff and Cleco which settled the FERC's non-public investigation into certaintransactions.  For more information about the Consent Agreement andFERC settlement, see Note 16 - "Subsequent Events - FERC Settlement."  Thecontinuing LPSC investigation may result in determinations of possible orapparent violations in addition to those described in this Note and in Note 16.

          The indirect salesof test power by Evangeline occurred just prior to the commercial operationdate of that plant in 2000.  More specifically, Evangeline sold testpower directly to a third party to be resold to Cleco Power.  Inaddition, Marketing & Trading purchased test power in 2002 from Acadia and soldsome of this power to a third party to be resold to ClecoPower.  Cleco Power's purchases from these third parties were at thesame volumes and same prices as the third parties' purchases from Evangeline orMarketing & Trading and as Marketing & Trading's purchases from Acadia.  It appears some of thesetransactions may have potentially exceeded the pricing standards of theLPSC.  Management is unable to predict the remedial actions that maybe taken with respect to these transactions by the LPSC.  Forinformation about the FERC settlement concerning these transactions, see Note16 - "Subsequent Events - FERC Settlement."

          During the years1999 through 2002, Marketing & Trading and Cleco Power engaged intransactions in which power was sold indirectly between Marketing & Tradingand Cleco Power through the use of a third party.  In thesetransactions, Marketing & Trading would either indirectly buy power from,or sell power to Cleco Power through the use of a third party.  Itappears some of these transactions may have potentially exceeded the pricingstandards of the LPSC and its guidance concerning affiliate relations.  Management is unable to predict the remedial actions that may be taken withrespect to these transactions by the LPSC and cannot reasonably estimate Cleco'sminimum probable contingency for these transactions.  For informationabout the FERC settlement concerning these transactions, see Note 16 - "SubsequentEvents - FERC Settlement."

          From 1999 throughmid-January 2002, the same personnel performed the trading operations of ClecoPower and Marketing & Trading.  Management believes this relationshipand certain transactions described in this Note may be reviewed in Cleco Power'spending LPSC fuel audit.  For additional information on the fuelaudit, see "Management's Discussion and Analysis of Financial Condition andResults of Operations - Financial Condition - Regulatory Matters - Fuel Audit."  Forinformation about the FERC settlement concerning this issue, see Note 16 - "SubsequentEvents - FERC Settlement."

41

          Cleco Power hasrecorded reserves which estimate the amount of potential refund to customersrelating to credits received from Marketing & Trading and Evangeline, asrequired by the Consent Agreement.  Reserves have not beenestablished for any other item relating to the current LPSC fuel audit becausemanagement is unable to predict the actions that may be taken by the LPSC andcannot reasonably estimate Cleco's minimum probable contingency for the fuelaudit.  For information about the penalties and remedies contained inthe Consent Agreement, see Note 16 - "Subsequent Events - FERC Settlement."

**Note 6 - Recent Accounting Standards**

          In January2003, FASB released FIN 46, which expands the requirements of consolidation byincluding entities defined as "Variable Interest Entities" which depend on thefinancial support of a parent in order to maintainviability.  Detailed tests prescribed in FIN 46 can be used todetermine the dependence of a Variable Interest Entity on a parentcompany.  Currently, Cleco does not have any interest in Variable InterestEntities, but does have equity investments that do not qualify forconsolidation under FIN 46.  For information about Cleco's equityinvestments, see Note 4 - "Equity Investment in Investees."  FIN 46is effective for all financial statements issued after January 31, 2003.

          In April 2003, FASBissued SFAS No. 149, which amends SFAS No. 133 by incorporating certaindecisions made by the FASB as a part of the DIG process.  Thispronouncement also amends several FASB statements as they relate to FASBStatement of Concepts 7 - Using Cash Flow Information and Present Value inAccounting Measurement.  Portions of this statement are currentlyeffective since prior clearance on certain DIG issues was effective for datesprior to the issuance of SFAS No. 149.  Other portions of thispronouncement are effective after June 30, 2003.  The adoption ofthis standard will not have a material effect on Cleco's financial statements.

          InApril 2003, FASB issued SFAS No. 150, which established standards on how anentity classifies and measures certain financial instruments withcharacteristics of both liabilities and equity.  Generally, afinancial instrument which requires the entity to either repurchase theinstrument in cash or other assets or requires the entity to issue a variablenumber of shares in order to redeem the financial instrument must be reportedas liabilities and any dividends must be reported as interestcosts.  Obligations to repurchase or settle the financial instrumentupon the liquidation or termination of the entity are not within the scope ofSFAS No. 150.  The provisions of the statement are effective forfinancial instruments entered into or modified after May 31, 2003, and otherwise will be effective at the beginning of the first interim period beginningafter June 15, 2003.  The adoption of this standard will not have anyeffect on Cleco's financial statements.

**Note 7 - Cumulative Change in Accounting Principle - Accounting for AssetRetirement Obligation**

          Cleco has recordedan asset retirement obligation in accordance with SFAS No. 143 that becameeffective on January 1, 2003.  SFAS No. 143 requires an entity torecord an asset retirement obligation when a regulatory, contractual, or otherobligation exists which would require the entity to incur costs to retire theasset.  The asset retirement obligation for Cleco Power consists ofthe estimated costs of closing the solid waste facilities associated with oneof its power plants that uses coal or lignite for fuel.  Due to anabsence of contractual, regulatory, or other legally enforceable requirementsto incur costs to retire assets, Midstream did not record an asset retirementobligation.

          Cleco Powerrecognizes an offset to the accretion and depreciation expenses associated withits asset retirement obligation in the form of a regulatory asset pursuant toSFAS No. 71.  Cleco Power recognizes a regulatory asset sincemanagement believes it is probable that the costs of closing its solid wastefacilities will be collected from its customers through rates established bythe LPSC.

          If SFAS No. 143 hadbeen in effect in 2002, there would have been no impact on earnings per sharefor either the quarter ended June 30, 2002, or the six months ended June 30, 2002, net of income tax effect.  Since a change in earnings per sharewould not have occurred, proforma earnings per share disclosures are notpresented.

42
 
          Thetable below discloses the proforma asset retirement obligation during the sixmonths ended June 30, 2002, by segment, as if SFAS No. 143 had been effectivein 2002.

Asset Retirement  Obligation  at December31, 2001

Obligation  recognized on  initialapplication

Obligation  recognized on assetsacquired

Accretion of  obligation  recognized  throughJune 30, 2002

Asset  Retirement  Obligation atJune 30, 2002

(Thousands)

Cleco Power

$     286

$           -

$          -

$         8

$     294

Midstream

            -

             -

            -

           -

           -

     Total

$     286

$           -

$          -

$         8

$     294

          Thetable below discloses the changes to the asset retirement obligation, bysegment, during the six months ended June 30, 2003.

Asset Retirement  Obligation  at December31, 2002

Obligation  recognized on  initialapplication

Obligation  recognized  on assetsacquired

Accretion of  obligation  recognized  through  June 30, 2003

Asset  Retirement  Obligation atJune 30, 2003

(Thousands)

Cleco Power

$        -

$       301

$         -

$         11

$      312

Midstream

          -

             -

           -

             -

           -

     Total

$        -

$       301

$         -

$         11

$     312

**Note 8 - Accrual forEstimated Customer Credits**

          Cleco'sreported earnings for the six months ended June 30, 2003, reflect a $9.4 million accrual within Cleco Power for estimated customer credits that areexpected to be required under terms of an earnings review settlement reachedwith the LPSC in 1996.  The financial results of the third quarter of2003 will impact the accrual of estimated credits to be refunded, ifany.  The 1996 LPSC settlement, and a subsequent amendment, set ClecoPower's rates until September 30, 2004.  As part of the settlement,Cleco Power is allowed to retain all regulated earnings up to a 12.25% returnon equity and to share equally with customers as credits on their bills allregulated earnings between 12.25% and 13% return on equity.  Allregulated earnings above a 13% return on equity are credited tocustomers.  The amount of credits due customers, if any, isdetermined by the LPSC annually based on results for each 12-month period endedSeptember 30.  The settlement provides for such credits to be made oncustomers' bills the following summer.  The LPSC's preliminary reportfor the cycle ended September 30, 2001, required a $0.6 million refund, whichwas credited to customers' bills in September 2002.  Clecoanticipates receiving the final report for the cycle ended September 30, 2001 in the fourth quarter of 2003.  The LPSC has not yet issued itspreliminary report for the cycle ended September 30, 2002.  Managementis unable to predict what Cleco Power's allowed return on equity will be after September 30, 2004.

          ClecoPower's Unaudited Balance Sheets, under the line item other deferred credits,reflect a $12.8 million accrual for estimated customer credits related to the12-month cycles ended September 30, 2001, 2002, and2003.  These amounts were recorded as a reduction in revenue due tothe nature of the customer credits.  The accrual is based upon theoriginal 1996 settlement, the resolution of annual issues as agreed betweenCleco and the LPSC, and Cleco's assessment of issues that remain outstanding.

**Note 9 - RestructuringCharge**

          DuringSeptember 2002, Cleco announced a companywide organizationalrestructuring.  During the fourth quarter of 2002, 123 employeesaccepted severance and 37 employees accepted an early retirementpackage.  The majority of these employees left during the fourth quarterof 2002.

43

          Thefollowing table shows the type of charges incurred, the amounts paid, thedecrease in the amount originally recorded as a restructuring charge and theremaining balance in the associated liability accounts, where appropriate, thatis still to be paid as of June 30, 2003, for Cleco Corporation.

Category of cost

Originally  expensed in2002

Paid  through   June 30,   2003

Change  in originalexpense

Liability  remaining

(Thousands)

Cash items

   Severance  and other employee payouts, including         associated payroll taxes

$   6,509  

$ 5,469  

$   (474) 

$     566  

   Lease termination  payments

592  

      127  

-  

465  

   Other

          43  

       43  

           -  

           -  

         Total cash  items

     7,144  

  5,639  

     (474) 

    1,031  

Noncash items

   Special termination  benefits

2,736  

-  

-  

-  

   Write-off of  leasehold improvements

        284  

          -  

           -  

           -  

         Total  noncash items

     3,020  

          -  

           -  

           -  

            Total

$ 10,164  

$ 5,639  

$   (474) 

$  1,031  

          The following tableshows the type of charges incurred, the amounts paid, the decrease in theamount originally recorded as a restructuring charge and the remaining balancein the associated liability accounts, where appropriate, that is still to bepaid as of June 30, 2003, for Cleco Power.

Category of cost

Originally  expensed in2002

Paid  through   June 30,2003

Change  in originalexpense

Liability  remaining

(Thousands)

Cash items

   Severance  and other employee payouts, including         associated payroll taxes

$  4,150  

$  3,821  

$       (129) 

$     200  

   Share of affiliate  severance payouts

    1,314  

   1,243  

       (71) 

           -  

         Total cash  items

    5,464  

   5,064  

       (200) 

      200  

Noncash items

   Special termination  benefits

2,368  

-  

-  

-  

   Write-off of  leasehold improvements

       267  

           -  

           -  

           -  

         Total  noncash items

    2,635  

           -  

           -  

           -  

            Total

$  8,099  

$  5,064  

$       (200) 

$     200  

          The amount recordedfor the first six months ended June 30, 2003 relating to the restructuring chargeis relatively small and is included in other operations expense on theRegistrants' income statements.  No business segment or component ofa business segment qualified as a discontinued operation as a result of thisrestructuring.

**Note 10 - Accounting for Stock-Based Compensation - Transition andDisclosure**

          In connection withincentive compensation plans in effect during the six-month period ended June 30, 2003, certain officers and key employees of Cleco Corporation were awarded sharesof restricted Cleco Corporation common stock.  The cost of therestricted stock awards, as measured by the market value of the common stock atthe time of the grant, is recorded as compensation expense during the periodsin which the restrictions lapse.  As of June 30, 2003, the number of shares of restricted stock previously granted for which restrictions had notlapsed totaled 373,365 shares.

          Cleco Corporationrecords no charge to expense with respect to the granting of options at fairmarket value or above to employees or directors.  Options may begranted to certain officers, key employees, or directors of Cleco Corporationor its subsidiaries.  During 2003, Cleco Corporation granted optionsexercisable for 15,000 shares of common stock to re-electeddirectors.  The options have an exercise price approximately equal tothe fair market value of the stock at grant date, are immediately exercisable,and expire after ten years.  In accordance with APB No. 25, nocompensation expense for stock options granted has been recognized.

44
 
          At June 30, 2003, Cleco Corporation had two stock-based compensation plans: theLTICP and the ESPP.  APB No. 25 and related interpretations areapplied in accounting for Cleco Corporation's plans.  Accordingly, nocompensation cost has been recognized for stock options issued pursuant to theLTICP and stock issued under the ESPP.  Compensation cost has beenrecognized for restricted stock issued pursuant to Cleco Corporation'slong-term incentive plan.  For the three months ended June 30, 2003, $1.1 million in expense was recognized, while $1.6 million in expense wasrecognized during the same period in 2002. For the six months ended June 30, 2003, $0.5 million in income was recognized, while $2.5 million in expense wasrecognized during the same period in 2002.  Had the compensationexpense for Cleco Corporation's stock-based compensation plans been determinedconsistent with SFAS No. 123, net income and net income per common sharewould approximate the proforma amounts below:

For the three  months ended June 30,

**2003**

2002

(Thousands)

**AsReported**

**ProForma**

AsReported

ProForma

SFAS No. 123 expense

**$           - **

**$       140 **

$           - 

$      200 

Estimated reduction in  income tax for     SFAS No. 123 expense

**- **

**(53)**

- 

(70)

Net income (loss)  applicable to common stock

**$(59,168)**

**$(66,945)**

$ 17,317 

$ 17,187 

Basic net income (loss)  per common share

**$    (1.42)**

**$    (1.42)**

$     0.38 

$     0.37 

Diluted net income  (loss) per common share

**$    (1.42)**

**$    (1.42)**

$     0.36 

$     0.35 

 

For the six months  ended June 30,

**2003**

2002

(Thousands)

**AsReported**

**ProForma**

AsReported

ProForma

SFAS No. 123 expense

**$           - **

**$      268 **

$           - 

$      335 

Estimated reduction in  income tax for     SFAS No. 123 expense

**       - **

**(108)**

         - 

(120)

Net income (loss)  applicable to common stock

**$(49,522)**

**$(49,682)**

$ 30,898 

$ 30,683 

Basic net income (loss)  per common share

**$    (1.05)**

**$    (1.05)**

$     0.68 

$     0.67 

Diluted net income  (loss) per common share

**$    (1.05)**

**$    (1.05)**

$     0.66 

$     0.65 

          The effects ofapplying SFAS No. 123 in this proforma disclosure are not necessarilyindicative of future amounts.  SFAS No. 123 is not applicable toawards prior to 1995.  Cleco Corporation anticipates making awards inthe future under its stock-based compensation plans.

**Note 11 - Securities Litigation and Other Commitments and Contingencies**

          OnNovember 22, 2002, a lawsuit was filed in the Ninth Judicial District Court,Rapides Parish, State of Louisiana, purportedly on behalf of a class of persons or entitieswho purchased Cleco Corporation's common stock during a specified period oftime, hereinafter referenced as the Class Period.  Cleco Corporationrefers to this lawsuit as the SecuritiesLitigation.  In the Securities Litigation, the plaintiff alleges thatCleco Corporation issued a number ofmaterially false and misleading statements during the Class Period, among otherpurposes, in order to cause the price of Cleco Corporation's stock to rise artificially.  The plaintiffalleges that, during the Class Period, Cleco Corporation failed to disclose the existence of the round-trip tradesthat Cleco Corporation disclosed in itsQuarterly Report on Form 10-Q for the quarterly period ended September 30,2002.  The plaintiff also alleges that Cleco Corporation's financial information was not prepared in conformitywith accounting principles generally accepted in the United States of Americaduring the Class Period.  The defendants removed the lawsuit to theUnited States District Court for the Western District ofLouisiana.  In May 2003, the lawsuit was dismissed without prejudice,allowing the plaintiff to re-file the lawsuit subject to certain stipulationsand restrictions.  As of the date of this Report, the plaintiff hasnot re-filed the lawsuit.  Based on information currently availableto management, Cleco Corporation does not believe the Securities Litigationwill have a material adverse effect on Cleco'sfinancial condition or results of operations.

45
 
          OnApril 18, 2003,a Shareholder's Derivative Complaint was filed by a shareholder of Westar, inthe United States District Court for the District of Kansas.  Thedefendants named in the complaint are Westar, its Board of Directors, itsformer Chief Executive Officer, President and Chairman, and ClecoCorporation.  The complaint alleges violations of Section 14(a) ofthe Securities Exchange Act of 1934 and Rule 14a-9 promulgated thereunder, and,in addition, breaches of fiduciary duties owed to Westar and/or for aiding andabetting such breaches.  The complaint asserts that Cleco Corporationaided and abetted the director defendants' breaches of fiduciary duties byengaging in round-trip trades with Westar.  The complaint seeks theaward of unspecified compensatory damages against the defendants and theplaintiff's costs and disbursements of the lawsuit.  The lawsuit isstill in its formative stages; therefore, management is unable to estimate theimpact on Cleco's financial condition or results of operations.

          Cleco is involvedin regulatory, environmental, and legal proceedings before various courts,regulatory commissions, and governmental agencies regarding matters arising inthe ordinary course of business, some of which involve substantialamounts.  In several lawsuits, Cleco has been named as a defendant byindividuals who claim injury due to exposure to asbestos while working at sitesin central Louisiana.  Most of the claimants were workers whoparticipated in the construction of various industrial facilities, includingpower plants, and some of the claimants have worked at locations owned byCleco.  Cleco's management regularly analyzes current informationand, as necessary, provides accruals for probable liabilities on the eventualdisposition of these matters.  Cleco's management believes that thedisposition of these matters will not have a material adverse effect on Cleco'sfinancial condition, results of operations, or cash flow.

          Forinformation regarding off-balance sheet commitments, see "Management'sDiscussion and Analysis of Financial Condition and Results of Operations -Financial Condition - Off-Balance Sheet Commitments."  Forinformation regarding an additional contingency, see Note 5 - "Review ofTrading Activities."  For information on the fuel audit, see "Management'sDiscussion and Analysis of Financial Condition and Results of Operations -Financial Condition - Regulatory Matters - Fuel Audit."  For informationregarding a petition filed in Louisiana state court on July 24, 2003, see Note 16 - "Subsequent Events - Litigation."

          Cleco has accruedfor liabilities to third parties, employee medical benefits, storm damages, anddeductibles under insurance policies that it maintains on major properties,primarily generation stations and transmissionsubstations.  Consistent with regulatory treatment, annual charges tooperating expenses to provide a reserve for future storm damages are based uponthe average amount of noncapital, uninsured storm damages experienced by ClecoPower during the previous six years.

**Note 12 - Disclosures about Guarantees**

          ClecoCorporation and Cleco Power have agreed to contractual terms that require themto pay amounts to third parties upon the occurrence of certain triggeringevents.  These contractual terms are generally defined as guaranteesin FIN 45.  Guarantees issued or modified after December 31, 2002, that fall within the initial recognition scope of FIN 45 are required to berecorded as a liability.  Outstanding guarantees that fall within thedisclosure scope of FIN 45 are required to be disclosed for all accountingperiods ending after December 15, 2002.  Generally, Cleco'sguarantees are not required to be recorded on the balance sheet; however, ClecoPower does have one guarantee recorded on its balance sheet, as described inthe following paragraph.  The following paragraphs contain thedisclosure requirements.

          Cleco Power enteredinto a new pension plan trustee agreement on June 30, 2003, in conjunction with a change of pension plan trustees.  A provision of the new pensionplan trustee agreement requires Cleco Power to indemnify the new trustee forany damages it has to pay due to past actions of prior trustees.  Theindemnification does not contain a specific maximum payment amount; however,management has estimated that the probable future payments under this guaranteeare immaterial.  A discounted liability and related charge of lessthan $0.1 million was recorded in the second quarter of 2003.

          In its bylaws,Cleco Corporation has agreed to indemnify directors, officers, and employeeswho are made a party to a pending or completed suit, arbitration,investigation, or other proceeding whether civil, criminal, or administrativeif the basis of inclusion arises as the result of acts conducted in thedischarge of their official capacity.  Cleco Corporation haspurchased various insurance policies to reduce the risks associated with theindemnification.  In its Operating Agreement, Cleco Power providesfor the same indemnifications as described above.

          As a part of thesale of UTS, Cleco agreed to indemnify the purchaser for losses resulting fromcertain breaches.  Under the asset purchaseagreement, UTS and its sole member have agreed to indemnify Quanta for lossesresulting from certain breaches or failures by UTS and its sole member tofulfill their obligations under the asset purchase agreement and for taxes andother losses arising from events occurring prior to the sale.  Theindemnification amount was limited to approximately $5.0 million and terminatedon April 1, 2003.  The limitation does not apply to fraudulentmisrepresentations.  At June 30, 2003, no amountshad been recorded for the indemnifications because no claim has been assertedby Quanta.

46

          ClecoCorporation issued several guarantees on behalf of Acadia.  Oneguarantee was issued to Aquila Energy, one of Acadia'sinitial tolling counterparties.  This guarantee wasextinguished in May 2003 when the tolling agreement with Aquila Energy wasterminated, and a subsidiary of Calpine entered into a new tolling agreementwithout requiring a guarantee from Cleco.  The other guarantee wasissued to Acadia's constructioncontractor.  If Acadia cannot pay the contractor who built its plant,Cleco Corporation is obligated to pay 50% of the current contractor's amountoutstanding.  At June 30, 2003, Cleco Corporation's 50% portion ofthe current contractor's amount outstanding was approximately $0.4million.  Acadia began commercial operations during the third quarterof 2002, and this guarantee will terminate upon full payment of the Acadia constructioncontract.

          Cleco Corporationhas issued guarantees and letters of credit to support the activities of Perryville, Midstream, Evangeline,Cleco Energy and Marketing & Trading.  These commitmentsare not within the scope of FIN 45 since these are guarantees of performance by wholly owned subsidiaries.  Forinformation regarding these commitments, see "Management's Discussion andAnalysis of Financial Condition and Results of Operations - Financial Condition- Off-Balance Sheet Commitments."

          As part of alignite mining agreement entered into in 2001, Cleco Power and SWEPCO haveagreed to pay the lignite miner's loan and lease principal obligations when dueif the lignite miner does not have sufficient funds or credit topay.  Any amounts paid on behalf of the miner would be credited bythe lignite miner against the next invoice for lignite delivered.  At June 30, 2003, Cleco Power's 50% exposure was approximately $29.2million.  The lignite mining contract is in place until 2011.

**Note 13 - Debt**

          ClecoCorporation replaced its previous $225.0 million credit facility with a newfacility on May 7, 2003.  The new facility is a $105.0 million,364-day facility, which provides that borrowings outstanding on the maturitydate may be converted into a nine-month term loan.  This facilityprovides support for the issuance of commercial paper and working capital andother needs.  The borrowing cost under the new facility is equal toLIBOR plus 1.625% which includes facility fees.  At June 30, 2003, $50.0 million was outstanding under the facility.  If Cleco Poweror Midstream defaults under their respective facilities, then Cleco Corporationwould be considered in default under this facility.  Off-balancesheet commitments will reduce the amount of credit available to ClecoCorporation under this facility by an amount equal to the stated ordeterminable amount of the primary obligation of suchcommitments.  Perryville's default on the Senior Loan Agreement,which is discussed further in Note 16 - "Subsequent Events - Mirant Bankruptcy- Perryville's Senior Loan Agreement," is not considered a default under thisnew credit facility.

          Cleco Powerreplaced its previous $107.0 million credit facility with a new facility on May 7, 2003.  The new facility is an $80.0 million, 364-day facility, which providesthat borrowings outstanding on the maturity date may be converted into anine-month term loan.  This facility willprovide support for the issuance of commercial paper and working capital andother needs.  The borrowing cost under the new facility is equal toLIBOR plus 1.25% which includes facility fees.  AtJune 30, 2003,there were no borrowings under the facility.

          On April 28, 2003, ClecoCorporation issued $100.0 million aggregate principal amount of its seniorunsecured notes at an interest rate of 7.0%.  The notes mature on May 1, 2008.  The netproceeds from the notes offering were used to repay outstanding borrowingsunder Cleco Corporation's revolving credit facility.  The notes wereissued pursuant to Cleco Corporation's debt shelf registration statement(Registration No. 333-33098).  No additional debt securities may beoffered and sold under this shelf registration statement.

          On April 28, 2003, Cleco Powerissued $75.0 million aggregate principal amount of its senior unsecured notesat an interest rate of 5.375%.  The notes mature on May 1, 2013.  The netproceeds from the notes offering were used to repay outstanding borrowingsunder Cleco Power's revolving credit facility.  The notes were issuedpursuant to Cleco Power's debt shelf registration statement (Registration No.333-52540).  Cleco Power has issued a total of $150.0 million inaggregate principal amount of debt securities pursuant to the shelfregistration statement, leaving $50.0 million of availability for futureissuance.

47
****
**Note 14 - Income Taxes**

          Cleco Corporation'seffective income tax rate for the second quarter of 2003 was 38.0% compared to35.0% in the same period of 2002.  Cleco Corporation's effectiveincome tax rate for the six months ended June 30, 2003 was 40.1% compared to 35.7% in the same period of 2002.  The increases in the effectiveincome tax rates were primarily attributable to a loss recognized by Perryvilleas a result of a $134.8 million impairment charge recorded in June 2003 combinedwith a non-tax deductible civil penalty of $0.8 million payable to FERC inaccordance with the Consent Agreement.  For information on theimpairment charge, see Note 15 - "Impairment of Long-Lived Assets" and forinformation on the Consent Agreement, see Note 16 - "Subsequent Events - FERCSettlement."

          Cleco Power'seffective income tax rate for the six months ended June 30, 2003 decreased from 37.1% to 33.8% compared to the same period in 2002.  Thedecrease in the effective income tax rate was largely due to the carryforwardof a 2002 state net operating loss, which greatly reduced current state incometax expense, as computed using the flow-through method of accounting for stateincome taxes, in accordance with LPSC guidelines.  Contributing tothe decrease in the effective income tax rate was an adjustment related to aninternal review of accumulated deferred income taxes.

**Note 15 - Impairment of Long-Lived Assets**

          Perryville,a wholly owned subsidiary of Midstream owns and operates a 725-MW naturalgas-fired power plant near Perryville, Louisiana.  The Perryvillefacility consists of approximately 565 MW of combined-cycle capacity and approximately160 MW of peaking capacity.  In July 2001, Perryville entered intothe Perryville Tolling Agreement, a 20-year capacity and energy agreement forPerryville's entire capacity with MAEM, a subsidiary of Mirant.  Underthe terms of the Perryville Tolling Agreement, MAEM is obligated to supplynatural gas to fuel the Perryville facility and is entitled to all the capacityand energy from the facility.  Perryville is obligated to beavailable to provide its energy conversion services, within specifiedefficiency parameters, when MAEM requires.  The agreement requiresMAEM to pay Perryville various capacity reservation and fixed operations andmaintenance fees, the amounts of which depend upon the type of capacity andultimate availability achieved by the facility.  In addition to thecapacity reservation and fixed operating and maintenance payments from MAEM,Perryville is entitled to collect revenues associated with variable operatingand maintenance expenses based on actual output from the facility.

          In May 2003,Perryville signed a letter of intent to sell the Perryville facility to anEntergy subsidiary.  Pursuant to the letter of intent, the sale iscontingent upon execution of a definitive purchase agreement; obtainingnecessary approvals from state and federal regulators, including the LPSC, theFERC and the SEC; completion of a due diligence review by Entergy; thesettlement of various project-related contracts; and other customary closingconditions.  The letter of intent expires on August 15, 2003, or upon signing a definitive purchase agreement, whichever is earlier.   Perryvilledoes not expect to execute a definitive purchase agreement that is consistentwith the commercial terms of the letter of intent before August 15, 2003.  However, Entergy has informed Cleco that it may be willing to continue tonegotiate with Cleco regarding the sale of the Perryville facility and managementintends to continue to negotiate with Entergy, Mirant and the Perryvillelenders, even after the expiration of the letter of intent.

          Prior to the July14, 2003 filing by Mirant and certain of its subsidiaries, including MAEM, for voluntaryprotection under Chapter 11 of the U.S. Bankruptcy Code, the carrying value ofthe Perryville facility was compared to its undiscounted, probability-weighted,future cash flows.  That calculation, pursuant to SFAS No. 144,corresponded largely to the future cash flows expected to be received under thePerryville Tolling Agreement.  Due to Mirant's bankruptcy filing, theprobability weighting of future cash flows under possible scenarios, asrequired by SFAS No. 144, has changed significantly.  As a result ofthe change in probability weighting of Perryville's undiscounted future cashflows, management believes the carrying value of Perryville's long-lived assetsis impaired; therefore, the carrying value of these assets has been reduced tofair value.  While the fair value of Perryville's assets can bemeasured several ways, management believes Perryville's fair value is bestevidenced by current market indicators of transactions between willing buyersand sellers as opposed to the discounted cash flows from a subjective,probability-weighted calculation.  The difference between Perryville'scarrying value and its fair value as determined by current market indicators oftransactions between willing buyers and sellers, resulted in an impairmentcharge of $134.8 million in the second quarter of 2003.  This chargeis presented in a separate line item in the "Operating Expenses" section of theUnaudited Consolidated Statements of Income.  Future earnings couldbe realized if Cleco receives value from the Mirant bankruptcy process.  Forinformation on the impact of the Mirant bankruptcy on Cleco, see Note 16 - "SubsequentEvents-Mirant Bankruptcy."

48
 
**Note 16 - Subsequent Events**

***Mirant Bankruptcy***

          In 2001,Perryville entered into the Perryville Tolling Agreement withMAEM.  Subsequent to several restructurings of the Perryville TollingAgreement, Mirant and MAI provided guarantees which support MAEM's obligationsunder the Perryville Tolling Agreement.  On July 14, 2003, Mirant, MAEM, MAI and certain other Mirant subsidiaries filed for protection underChapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Courtfor the Northern District of Texas.  Under the terms of the PerryvilleTolling Agreement, Perryville invoiced MAEM for $4.5 million of tolling revenueand $1.8 million of long-term service agreement reimbursement for Juneactivity.  Perryville recorded a reserve for uncollectible accountsof $6.3 million at June 30, 2003, since MAEM did not make the payment that wasdue on July 21, 2003.  This charge is included in the "OperatingExpenses" section of the Unaudited Consolidated Statements of Income.

*Perryville's Senior Loan Agreement*

          Thebankruptcy filing by Mirant and certain of its subsidiaries was an event ofdefault under Perryville's Senior Loan Agreement.  This event ofdefault gives the lenders holding in aggregate at least 66-2/3% of theoutstanding senior loan the right, but not the obligation, to declare any outstandingprincipal and interest immediately due and payable, which as of June 30, 2003was $135.7 million.  As such, Perryville's debt is consideredshort-term debt and is classified in the current liabilities section of thebalance sheet.  As required under the Senior Loan Agreement,Perryville gave timely notice of the event of default to KBC, the agent bank.  Otherremedies available to the lenders due to this event of default includeforeclosure on Cleco's membership interest in Perryville, as well as thePerryville assets themselves.  In addition, the lenders could seizecontrol of all cash in any restricted accounts related to the Senior LoanAgreement.  In the event the lenders choose to exercise their rightto foreclose and Cleco cannot obtain funding from other sources to repay allamounts outstanding under the Senior Loan Agreement, the lenders may takeownership of Cleco's membership interest in Perryville and/or the Perryvilleassets which were pledged as collateral against the Senior Loan Agreement.  Ifthe lenders foreclose on Cleco's membership interest in Perryville, they wouldindirectly own all of Perryville's assets, including any rights to damages fromMirant for breach of the Perryville Tolling Agreement.  Foreclosureby the lenders may result in an additional loss of Cleco's equity in Perryville,which at June 30, 2003, was approximately $5.0 million.  Managementis unable to predict any subsequent action that KBC or the lenders may take underthe Senior Loan Agreement.  However, since Perryville's Senior LoanAgreement is nonrecourse to Cleco Corporation (other than a guarantee of thecurrent year's debt service, which as of June 30, 2003 was $7.4 million), thisdefault should have no impact on any other credit facility or financing arrangementof Cleco Corporation or its other subsidiaries.

*Status of the Possible  Sale of Perryville to Entergy*

          Currently, managementis analyzing the impact of Mirant's bankruptcy filing on the possible sale ofthe Perryville facility to Entergy.  Management believes the eventualsale of Perryville to Entergy is still possible, but subsequent events in theMirant bankruptcy proceedings could significantly delay, disrupt, or preventany sale.

          In May 2003,Perryville signed a letter of intent to sell the 725-MW Perryville facility toan Entergy subsidiary.  Pursuant to the letter of intent, the sale iscontingent upon execution of a definitive purchase agreement; obtainingnecessary approvals from state and federal regulators, including the LPSC, theFERC and the SEC; completion of a due diligence review by Entergy; thesettlement of various project-related contracts; and other customary closingconditions.  The letter of intent expires on August 15, 2003, or upon signing a definitive purchase agreement, whichever is earlier.   Perryvilledoes not expect to execute a definitive purchase agreement that is consistentwith the commercial terms of the letter of intent before August 15, 2003.  However, Entergy has informed Cleco that it may be willing to continue tonegotiate with Cleco regarding the sale of the Perryville facility and managementintends to continue to negotiate with Entergy, Mirant and the Perryvillelenders, even after the expiration of the letter of intent.

          In connection withthe signing of the letter of intent, Perryville, Mirant, MAEM, MAI, PEH, andCleco entered into a Termination Agreement. Under the Termination Agreement,upon the closing of the sale of Perryville to Entergy, (i) MAEM agreed to makecertain cash payments to Perryville; (ii) the parties agreed to terminate thePerryville Tolling Agreement, the guarantees of Mirant and MAI, theSubordinated Loan Agreement (provided by MAEM as part of a negotiatedsettlement related to the failure by MAEM under the Perryville TollingAgreement to post a substantial letter of credit upon Mirant's failure tomaintain a certain credit rating), and certain other related documents; and(iii) Perryville agreed to release any other

49
 
claims arising from a termination of the Perryville TollingAgreement.  As part of the Termination Agreement, Mirant provided aletter of credit in favor of Perryville to support its payment obligationsunder the Termination Agreement.  Under the current terms of theTermination Agreement, if no definitive purchase agreement is signed byPerryville and Entergy on or before August 15, 2003, the Termination Agreementwill expire and Perryville and the appropriate Mirant entities will continue tobe bound by the Perryville Tolling Agreement and the Subordinated LoanAgreement.  Management does not expect a definitive purchaseagreement to be signed by August 15, 2003; and therefore, expects theTermination Agreement to expire pursuant to its terms on August 15, 2003.  Management intends to continue to negotiate with Mirant even after theexpiration of the Termination Agreement.

          Atthe time of or prior to confirmation of Mirant's plan of reorganization, Mirantcan elect to assume or reject any of its executory contracts, including thePerryville Tolling Agreement and, prior to August 15, 2003, the Termination Agreement.  If Mirant assumes one or both of these contracts, the assumedcontracts continue in force and Mirant would be required to cure any defaultsunder such contracts.  If Mirant rejects one or both of thesecontracts, Mirant would have no further obligation under that contract andPerryville would be entitled to assert a prepetition claim against Mirant fordamages resulting from Mirant's breach of the contract.  During thetime between the bankruptcy filing and Mirant's decision to assume or rejecteither of these contracts, Perryville is required to perform and is not allowedto sell any of Perryville's capacity or energy to third parties, and Mirant isauthorized to perform under each of the contracts.  If Mirant doesnot perform under the contracts prior to their rejection or assumption,Perryville is entitled to assert a post-petition administrative priority claim forthe value of Perryville's post-petition performance.  Mirant likely willassess the economics of continued performance under each of these contractsversus the nonperformance damages to be asserted by Perryville, if the contractsare rejected.  With respect to the Perryville Tolling Agreement,these damages likely would be based primarily on the difference between tollingpayments Perryville would have received under the Perryville Tolling Agreementfor the remainder of its term and payments Perryville would receive under anyreplacement contract in the market, although calculation of these damages wouldbe further complicated if any sale of Perryville is consummated.  Ifthe facility is not sold under these circumstances, Perryville would be allowedto continue to operate the facility and could choose the most optimalalternative to market its capacity and energy.  Currently, it isunclear whether Mirant will assume or reject the Perryville Tolling Agreementor the Termination Agreement.

***FERC Settlement***

          On July 25, 2003, the FERC issued an order approving a Consent Agreement between the FERCStaff and Cleco that settled the FERC's non-public investigation begun afterCleco's disclosure in November 2002 of certain energy marketing and tradingpractices.  This order, which includes the Consent Agreement, is attachedto this Report as Exhibit 99(e).  By its terms, the Consent Agreementbecomes effective 30 days after the date of issuance of the FERC's orderapproving it, or August 24, 2003 (the Effective Date).  As a part ofthe settlement, Cleco agreed to several penalties and remedies.
-  
Revocation of Marketing & Trading's market-based rateauthority will occur as of the Effective Date, except for minimal market-basedsales to meet existing contractual obligations which will expire or otherwisebe terminated on or before December 31, 2003.  Marketing &Trading may reapply to the FERC for market-based rate authority on the earlierof December 31, 2004 or one year from the cessation of market-based rate sales. -  
Refunds of $2.0 million by Marketing & Trading and $0.1million by Evangeline, for profits obtained through various affiliate energymarketing and trading transactions between 1999 and 2002, will be made to ClecoPower within 30 days of the Effective Date. -  
Payment of a $0.8 million civil penalty will be made to FERC    within 30 days of the Effective Date. -  
Agency agreements for wholesale power or transmission servicesbetween Cleco's public utility subsidiaries (Cleco Power, Marketing &Trading, Evangeline, Acadia, and Perryville) may not exist after the EffectiveDate without FERC's prior authorization. -  
 A separation of Cleco Power's trading floors in order to separateemployees engaged in retail sales functions from those engaged in wholesalesales functions must take place within 60 days of the Effective Date. -  
 A filing by Cleco's public utility subsidiaries to FERC ofrevised codes of conduct, as contained in the Consent Agreement, must be madewithin 30 days of the Effective Date.  The codes of conduct will morestringently control affiliate transactions. -  
 Implementation of an internal control compliance plan for FERCregulatory compliance for Cleco's public utility subsidiaries, as contained inthe Consent Agreement, according to various time deadlines specified in thecompliance plan will be required.  The compliance plan has athree-year term, beginning with the Effective Date, and requires periodicreporting to FERC Staff regarding the implementation of and continuedcompliance with the plan. 
50
 
          Thecivil penalty to be paid to FERC and refunds to Cleco Power were recorded inJune and July 2003.  Cleco Power will refund approximately $1.2million to customers through fuel cost adjustments over 12 months beginning inAugust 2003.  Cleco will work with the LPSC in the coming months todetermine the appropriate regulatory treatment for the remaining funds.

***Litigation***

          On July 24, 2003, a petition was filed in the 27th Judicial District Court, Parish of St.Landry, by several Cleco Power customers.  The named defendants areCleco Corporation, Cleco Power, Midstream, Marketing & Trading, Evangeline, Acadia, and Westar.  The plaintiffs are seeking class action statuson behalf of all Cleco Power's retail customers, and their petition centersaround Cleco's trading activities first disclosed by Cleco in November2002.  The plaintiffs allege, among other things, that the defendants'conduct was in violation of Louisiana antitrust law.  They seektreble damages, restitution, injunctive and other relief.  Thelawsuit is still in its formative stages; therefore, management is unable toestimate the impact on Cleco's financial condition or results of operations.

51
 
**ITEM2     MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL                    CONDITIONAND RESULTS OF OPERATIONS**

          The following discussionand analysis should be read in combination with the Registrants' CombinedAnnual Report on Form 10-K for the year ended December 31, 2002, and ClecoCorporation's and Cleco Power's Unaudited Financial Statements contained inthis Form 10-Q.  The information included therein is essential tounderstanding the following discussion and analysis.

***RESULTS OF OPERATIONS***

         Please read "Item 1Financial Statements - Cleco Corporation - Management's Discussion and Analysisof Results of Operations" and "Item 1 Financial Statements - Cleco Power LLC -Narrative Analysis of Results of Operations" of this Form 10-Q, whichdiscussions are incorporated herein by reference.

***FINANCIAL CONDITION***

**Liquidity and Capital Resources**

          Financing foroperational needs and construction requirements is dependent upon the cost andavailability of external funds from capital markets and financialinstitutions.  Access to funds is dependent upon factors such asgeneral economic conditions, regulatory authorizations and policies, Cleco's credit rating, the credit rating of Cleco's subsidiaries, the operations of projectsfunded and the credit ratings of project counterparties.  On March 24, 2003, Moody's downgraded the senior unsecured debt ratings of Cleco Corporationto Baa3 from Baa1, the senior secured debt ratings of Cleco Power to A3 fromA2, and the senior unsecured debt ratings of Cleco Power to Baa1 fromA3.  Moody's noted that the ratings outlook for Cleco Corporation isnegative and the ratings outlook for Cleco Power is stable.  In itspress release, Moody's stated that the downgrade reflected deterioration in thecredit quality of Cleco's unregulated power plants and the adverse underlyingmarket conditions for merchant generation in the SERC region.  In addition,Moody's stated that the stable outlook for Cleco Power reflected the relativestrength of the utility, constructive regulatory relations, reasonable amountsof leverage and strong cash flows.  On March 26, 2003, Standard & Poor's Ratings Services affirmed its senior unsecured debt ratings of Cleco atBBB- and Cleco Power at BBB.  Both Cleco's and Cleco Power's seniorunsecured debt ratings were taken off CreditWatch, but Standard & Poor'sstated that the outlook for the ratings is negative due to continueduncertainties surrounding Cleco's unregulated merchant energyactivities.  On June 23, 2003, Moody's revised its outlook for theEvangeline senior secured bonds to positive fromnegative.  Currently, Moody's rates the Evangeline bondsB3.  Moody's stated that this action reflected improvement in thecredit quality of Evangeline's tolling party guarantor, The Williams Companies,Inc.  Cleco notes that these credit ratings are not recommendationsto buy, sell or hold securities.  Each rating should be evaluatedindependently of any other rating.  If Cleco Corporation's or ClecoPower's credit ratings continue to be downgraded, Cleco Corporation or ClecoPower could be required to pay additional fees and higher interest rates underits bank credit and other debt agreements.

          The parentcompanies of Cleco's tolling counterparties are The Williams Companies, Mirant,and Calpine.  Williams and Calpine have issued guarantees of thepayment obligations of the respective tolling counterparties under the tollingagreements.  The credit ratings of these parent companies have beendowngraded below investment grade, and in some cases, placed on negative creditwatch for possible further downgrade by one or more ratingagencies.  Mirant and certain of its affiliates filed a voluntarypetition for reorganization under Chapter 11 of the U.S. Bankruptcy Code on July 14, 2003.  Thisbankruptcy has significant financial, operational, and business impacts onCleco, the most significant of which are related to the Perryville TollingAgreement, the Senior Loan Agreement at Perryville for which KBC acts as agent,the Subordinated Loan Agreement, and the possible sale of the Perryville facilityto Entergy.  For information regarding the effects of Mirant'sbankruptcy, see Note 16 - "Subsequent Events - Mirant Bankruptcy" in the Notesto the Unaudited Financial Statements in this Report.

          Under power and gastrading agreements entered into by Marketing & Trading with variouscounterparties, the counterparties have the right to request Cleco Corporationto provide credit support if the counterparty assesses Cleco Corporation'screditworthiness as unsatisfactory.  Under these agreements, thecounterparties can request credit support, but Cleco may opt to liquidate thetransactions and pay liquidating damages to the counterparties as applicable inaccordance with the terms and conditions of the contracts.  As of June 30, 2003, the amount Cleco Corporation would have been required to pay if all powerand gas trading counterparties that had credit exposure to Cleco requestedcredit support and Cleco Corporation

52
 
exercised its option not to provide credit support wasapproximately $0.6 million.  If Cleco Corporation instead elected toprovide the requested credit support on all transactions outstanding and didnot exercise its right to liquidate the transactions, Cleco Corporation wouldhave been required to post approximately $2.3 million in credit support as of June 30, 2003.  The discontinuation of Cleco's speculative trading activitiesduring the fourth quarter of 2002 has significantly reduced the amount ofrequired credit support relating to its trading activities.  However,the amount Cleco Corporation is required to pay at any point in the future remainsdependent on changes in the market price of power and gas, the changes in openpower and gas positions, and changes in the amount counterparties owe ClecoCorporation.  Changes in any of these factors could cause the amountof requested credit support to increase or decrease.

***Other***

          Various agreementsto which Cleco is subject contain covenants that restrict its use ofcash.  As certain provisions under these agreements are met, cash istransferred out of related escrow accounts and becomes available for generalcorporate purposes.  At June 30, 2003, $28.8 million of cash wasrestricted under the Evangeline senior secured bond indenture, $12.9 million ofcash was restricted at Perryville under the terms of the Senior Loan Agreement,and $1.8 million of APH's cash was restricted under the terms of the Midstreamcredit facility.

**Debt**

          At June 30, 2003 and December 31, 2002, $213.4 million and $315.3 million, respectively, ofshort-term debt was outstanding in the form of bank loans.  If Cleco Corporationwere to default under covenants in its various credit facilities, ClecoCorporation would be unable to borrow additional funds from the creditfacilities.  Perryville's default on the Senior Loan Agreement, asdescribed below under "- Midstream" and in Note 16 - "Subsequent Events -Mirant Bankruptcy - Perryville's Senior Loan Agreement" in the Notes tothe Unaudited Financial Statements in this Report, is not considered adefault under Cleco's new credit facility.  If Cleco Corporation'scredit rating as determined by outside rating agencies were to be downgraded,Cleco Corporation could be required to pay additional fees and higher interestrates.  As a result of the downgrades described above in "- Liquidityand Capital Resources," Cleco Corporation's interest rate increased by 0.06%and Cleco Power's increased by 0.2%.  At June 30, 2003, Cleco Corporation was in compliance with the covenants in its credit facilities.

          The following tableshows short-term debt by subsidiary:

Subsidiary

**At  June 30, 2003**

At  December 31, 2002

(Thousands)

Cleco Corporation (Holding Company Level)

** **

     Bank loans

**$     50,000  **

$  171,550      

Cleco Power

** **

     Bank loans

**-  **

107,000      

Midstream

** **

     Bank loans

**     163,448  **

      36,750      

          Total

**$   213,448  **

$  315,300      

***Cleco Corporation (Holding Company Level)***

          Short-termdebt decreased at Cleco Corporation by $121.6 million at June 30, 2003, compared to December 31, 2002, primarily due to the issuance of $100.0 million of noteson April 28, 2003 as discussed below.  A revolving credit facilityfor Cleco Corporation in the amount of $225.0 million, which was scheduled toterminate on June 4, 2003, provided for an optional conversion to a one-yearterm loan.  Cleco Corporation's borrowing cost under this facilitywas equal to LIBOR plus 1.25%, including facility fees.  ClecoCorporation replaced this credit facility with a new facility on May 7, 2003.  The new facility is a $105.0 million, 364-day facility, whichprovides that borrowings outstanding on the maturity date may be converted intoa nine-month term loan.  This facility provides support for theissuance of commercial paper and working capital and other needs.  At June 30, 2003, Cleco Corporation's borrowing cost under this facility wasequal to LIBOR plus 1.625%, including facility fees, and the weighted averagecost of the borrowings was 2.94%.  If Cleco Power or Midstreamdefaults under their respective facilities, Cleco Corporation would beconsidered in default under this facility.  Perryville's default on theSenior Loan Agreement, as described below under "- Midstream" and in Note 16 - "SubsequentEvents - Mirant Bankruptcy - Perryville's Senior Loan Agreement" in theNotes to the Unaudited Financial Statements in this Report, is not considered a

53
 
default under Cleco's new creditfacility.  Off-balance sheet commitments entered into by Cleco with thirdparties for certain types of transactions between those parties and Cleco's subsidiaries, other than Cleco Power, reduce the amount ofcredit available to Cleco Corporation under the facility by an amount equal tothe stated or determinable amount of the primary obligation.  At June 30, 2003, there was $50.0 million drawn on the facility, leaving $55.0 millionavailable.  The $55.0 million at June 30, 2003 was further reduced by off-balance sheet commitments of $24.6 million, leaving available capacityof $30.4 million.  Cash and cash equivalents available at June 30, 2003 were $28.5 million combined with $30.4 million facility capacity for totalliquidity of $58.9 million.  For more information about thesecommitments see "- Off-Balance Sheet Commitments."  The amount ofoff-balance sheet commitments and other indebtedness incurred by ClecoCorporation and reduction of the available amount of the facility was $49.2million at December 31, 2002.  An uncommitted line of credit with abank in an amount up to $5.0 million also is available to support ClecoCorporation's working capital needs.

          In August 2002, aportion of the Senior Loan Agreement was converted to the Subordinated LoanAgreement in the amount of $100.0 million.  In October 2002, theremainder of the $151.9 million senior loan was terminated and replaced with afive-year $145.8 million loan with a group of lenders led by KBC acting asagent.  The interest rate on both loans resetsquarterly.  It is based on LIBOR plus a spread, and the rate at June 30, 2003, was2.60%.  The spread is 1.50% for the first two years and 1.65% for thefollowing three years.  The loans provide for quarterly principal andinterest payments.  Cleco provides a guarantee to pay interest andprincipal under the Senior Loan Agreement should Perryville be unable to payits debt service.  At June 30, 2003, the amount guaranteed was $7.4 million.  Also,under the terms of the Senior Loan Agreement, specified amounts are required tobe maintained in restricted cash accounts for debt service payments, majormaintenance, and operating needs.  At June 30, 2003, there was $12.9 million inthese restricted cash accounts.  The Senior Loan Agreement iscollateralized by Cleco Corporation's membership interest inPerryville.  The Subordinated Loan Agreement also is collateralizedby Cleco Corporation's membership interest in Perryville, subordinate to claimsunder the Senior Loan Agreement.  The Senior Loan Agreement isscheduled to mature on October 1, 2007, and the Subordinated Loan Agreement is scheduled tomature on December 31, 2007.  The bankruptcy filing by Mirant and certain ofits subsidiaries was an event of default under Perryville's Senior LoanAgreement.  This event of default gives the lenders holding inaggregate at least 66-2/3% of the outstanding senior loan the right, but notthe obligation, to declare any outstanding principal and interest immediatelydue and payable, which as of June 30, 2003 was $135.7 million.  However,since Perryville's Senior Loan Agreement is nonrecourse to Cleco Corporation(other than to the extent of the guarantee discussed above), this default isnot an event of default under any other credit facility or financingarrangement of Cleco Corporation or its other subsidiaries.  In theevent the lenders choose to exercise their right to foreclose and Cleco cannotobtain funding from other sources to repay all amounts outstanding under theSenior Loan Agreement, the lenders may take ownership of the Perryville assetsand/or Cleco's membership interests in Perryville which were pledged ascollateral against the Senior Loan Agreement.  Foreclosure by thelenders may result in an additional loss of Cleco's equity in Perryville, whichat June 30, 2003, was approximately $5.0 million.  Managementis unable to predict subsequent action by KBC or the lenders under theagreement.  For additional information onthe effects of Mirant's bankruptcy filing, see Note 16 - "Subsequent Events- Mirant Bankruptcy" in the Notes to the UnauditedFinancial Statements in this Report.

          On April 28, 2003, ClecoCorporation issued $100.0 million aggregate principal amount of its seniorunsecured notes at an interest rate of 7.0%.  The notes mature on May 1, 2008.  The netproceeds from the notes offering were used to repay outstanding borrowingsunder its revolving credit facility.  The notes were issued pursuantto Cleco Corporation's debt shelf registration statement (Registration No.333-33098).  No additional debt securities may be offered and soldunder this shelf registration statement.

***Cleco Power***

          Short-termdebt decreased at Cleco Power by $107.0 million at June 30, 2003, compared to December 31, 2002, primarily due to the issuance of $75.0 million of seniornotes on April 28, 2003.  A revolving credit facility for Cleco Powerin the amount of $107.0 million, which was scheduled to terminate on June 4, 2003, provided for an optional conversion to a one-year termloan.  Cleco Power's borrowing cost under this facility was equal toLIBOR plus 1.00%, including facility fees.  Cleco Power replaced thiscredit facility with a new facility on May 7, 2003.  The new facilityis an $80.0 million, 364-day facility, which provides that borrowingsoutstanding on the maturity date may be converted into a nine-month termloan.  This facility provides support for the issuance of commercialpaper and working capital and other needs.  At June 30, 2003, no amounts were outstanding under this facility and Cleco Power's borrowing cost underthis facility was equal to LIBOR plus 1.25%, including facilityfees.  An uncommitted line of credit with a bank in an amount up to$5.0 million also is available to support Cleco Power's working capitalneeds.  Cash and cash equivalents available at June 30, 2003 were $33.6 million combined with $80.0 million facility capacity for a total of $113.6million.

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          OnApril 28, 2003,Cleco Power issued $75.0 million aggregate principal amount of its seniorunsecured notes at an interest rate of 5.375%.  The notes mature on May 1, 2013.  The netproceeds from the notes offering were used to repay outstanding borrowingsunder its revolving credit facility.  The notes were issued pursuantto Cleco Power's debt shelf registration statement (Registration No.333-52540).  Cleco Power has issued a total of $150.0 million inaggregate principal amount of debt securities pursuant to the shelfregistration statement, leaving $50.0 million of availability for futureissuance.

***Midstream***

          Short-term debtincreased at Midstream by $126.7 million at June 30, 2003, compared to December 31, 2002, primarily due to the reclassification of the Perryville debt toshort-term debt.  This increase partially was offset by quarterly paydown of debt on the Midstream credit facility.  The bankruptcy filingby Mirant and certain of its subsidiaries was an event of default underPerryville's Senior Loan Agreement which gives the lenders holding at least66-2/3% of the outstanding senior loan the right to declare any outstandingprincipal and interest immediately due and payable, which as of June 30, 2003was $135.7 million.  For additional information on Perryville'sSenior Loan Agreement, see Note 16 - "Subsequent Events - Mirant Bankruptcy -Perryville's Senior Loan Agreement" in the Notes to the Unaudited FinancialStatements in this Report.  Midstream has a $36.8 million creditfacility that expires in March 2004.  The facility is used to supportMidstream's generation activities, and outstanding balances are guaranteed byCleco Corporation on a subordinated basis.  Midstream's cost ofborrowings under this facility is equal to LIBOR plus 3.00%, includingcommitment fees, and was 4.125% at June 30, 2003.  At June 30, 2003, the balance due on this credit facility was $27.8 million.  Thisfacility requires that net proceeds from any sale of the Perryville assets mustfirst be applied to any outstanding borrowings under this credit facility.

**Off-Balance Sheet Commitments**

          Cleco has enteredinto various off-balance sheet commitments, in the form of guarantees and astandby letter of credit, in order to facilitate the activities of itssubsidiaries and equity investees (affiliates).  Cleco entered intothese off-balance sheet commitments in order to entice desired counterpartiesto contract with its affiliates by providing some measure of compensation tothe counterparty if its affiliates do not fulfill certain contractualobligations.  If Cleco had not provided the off-balance sheetcommitments, the desired counterparties may not have contracted with itsaffiliates, or may have contracted with them at terms less favorable to itsaffiliates.

          The off-balancesheet commitments are not recognized on Cleco Corporation's ConsolidatedBalance Sheets, because it has been determined that Cleco Corporation'saffiliates are able to perform these obligations under their contracts and thatit is not probable that payments by Cleco Corporation will berequired.  Some of these commitments reduce the amount of the creditfacility available to Cleco Corporation by an amount defined by the creditfacility.  The following table has a schedule of off-balance sheetcommitments grouped by subsidiary or affiliate on whose behalf each commitmentwas made.  The schedule shows the face amount of the commitment, anyreductions, the net amount, and reductions in Cleco Corporation's ability todraw on its credit facility at June 30, 2003.  Changes occurringsubsequent to June 30, 2003, and a discussion of the off-balance sheet commitmentsare detailed in the explanations following the table.  The discussionshould be read in conjunction with the table to convey the impact of theoff-balance sheet commitments on Cleco Corporation's financial condition.

 

At June 30, 2003

Subsidiaries/Affiliates

Face  amount

Reductions

Net amount

Reductions to the amount  available to be drawn on ClecoCorporation's credit facility

(Thousands)

Acadia Power Holdings LLC

   Guarantees issued to:

      Acadia plant construction  contractor

$        375 

$            - 

$        375 

$       375                  

Perryville Energy Holdings LLC

   Guarantees issued to:

      Perryville  Tolling Agreement counterparty

13,500 

- 

13,500 

1,812                  

      Perryville  debt service reserve

7,375 

- 

7,375 

7,375                  

Midstream

   Subordinated guarantee issued to bank

27,750 

- 

27,750 

-                  

Marketing & Trading and Cleco Energy

   Guarantees issued to various energy counterparties

217,750 

117,000 

100,750 

-                  

Evangeline  

   Standby letter of credit issued to Tolling Agreement  counterparty

15,000 

- 

15,000 

15,000                  

$ 281,750 

$ 117,000 

$ 164,750 

$  24,562                  

55
 
          IfPerryville or Evangeline fails to performcertain obligations under its respective tolling agreement, Cleco Corporationwill be required to make payments to the respective tolling agreementcounterparties of Perryville or Evangeline underthe commitments listed in the above table.  Cleco Corporation'sobligation under the Perryville commitment isin the form of a guarantee and is limited to $13.5 million.  ClecoCorporation's obligation under the Evangeline commitment is in the form of astandby letter of credit from investment grade banks and is limited to $15.0million.  Ratings triggers do not exist in the Perryville and Evangeline TollingAgreements.  Cleco expects Perryvilleand Evangeline to be able to meet their respective obligations under thetolling agreements and does not expect Cleco Corporation to be required to makepayments to the counterparties.  However, under the covenantsassociated with Cleco Corporation's credit facility, the entire net amount ofthe Evangeline commitment and $9.2 million of the Perryville commitments reducethe amount that can be borrowed under the credit facility.  Theguarantee for Perryville is in effect until2022 or until the tolling agreement is terminated; however, the tollingagreement could be terminated in connection with the Mirant bankruptcy or any saleof Perryville.  For additional information on the sale, see Note 16 -"Subsequent Events - Status of the Possible Sale of Perryville to Entergy" andfor information on the impact of Mirant's bankruptcy filing on the possiblesale, see Note 16 - "Subsequent Events - Mirant Bankruptcy" in the Notes to theUnaudited Financial Statements in this Report.  The letter of creditfor Evangeline is expected to be renewed annually until 2020.  ClecoCorporation was previously obligated under a guarantee to make payments of upto $12.5 million to Aquila Energy if Acadia failed to perform certainobligations under the corresponding tolling agreement.  Thisguarantee was extinguished in May 2003 when the tolling agreement with AquilaEnergy was terminated and a subsidiary of Calpine entered into a new tollingagreement without a guarantee from Cleco.

          If Acadia or Perryville cannot pay the contractors who builttheir plants, Cleco Corporation will be required to pay the current amountoutstanding.  Cleco Corporation's obligation under the Perryville arrangement is in the form of a guaranteeand is limited to the lesser of the balances of invoices outstanding or $24.0million.  At June 30, 2003, the current contractor's amountoutstanding was $0.1 million.  There was $0.1 million in a restrictedcash account at KBC available to pay the contractor and other constructionexpenses, which reduced Cleco Corporation's exposure with respect to thisobligation to zero.  The guarantee on the Perryvilleconstruction contracts will cease upon full payment of thosecontracts.  Cleco Corporation's obligation under the Acadiaarrangement is in the form of a guarantee and is limited to 50% of the totalfor the contractor's current amount outstanding.  At June 30, 2003, Cleco Corporation's 50% portion of the contractor's current amountoutstanding was approximately $0.4 million.  The guarantee on the Acadiaconstruction contracts will cease upon full payment of those contracts.  Managementexpects both Acadia and Perryville to have theability to pay their respective contractor as scheduled and does not expectCleco Corporation to pay on behalf of the subsidiaries.  However,under the covenants associated with Cleco Corporation's credit facility, thecurrent monthly amount due to the Acadia contractor reduces the amount ClecoCorporation can borrow under the credit facility.

          If Perryville is unable to make principal and interestpayments to its lenders under its Senior Loan Agreement, Cleco Corporation willbe required to pay up to $7.4 million on behalf of Perryvilleunder a guarantee issued in connection with the replacement of Perryville's construction loan in the fourth quarterof 2002.  For additional information on Mirant's bankruptcy impact onthe Senior Loan Agreement, see Note 16 - "Subsequent Events - Mirant Bankruptcy- Perryville's Senior Loan Agreement" in the Notes to the Unaudited FinancialStatements in this Report.

          When Midstream enteredinto a $36.8 million credit facility, Cleco Corporation entered into asubordinated guarantee with the lender.  Under the terms of theguarantee, Cleco Corporation will pay principal and interest if Midstream isunable to pay.  At June 30, 2003, there was $27.8 million outstandingunder the facility.  The subordinated guarantee does not reduce theamount Cleco can borrow under its credit facility, because it is subordinate toCleco Corporation's other liabilities.

          Cleco Corporation has issued guarantees to Marketing &Trading's counterparties in order to facilitate energy trading, and to ClecoEnergy's counterparties in order to facilitate energy operations.  Inconjunction with the guarantees issued, Marketing & Trading has receivedguarantees from certain counterparties and has entered into netting agreementswhereby Marketing & Trading is only exposed to the net open position witheach trading counterparty.  The guarantees issued and received expireat various times.  The balances of net guarantees for Marketing &Trading and Cleco Energy do not affect the amount Cleco Corporation can borrowunder its credit facility.  The total amount of guaranteed net openpositions with all of Marketing & Trading's and Cleco Energy'scounterparties over $20.0 million reduces the amount Cleco Corporation canborrow under its credit facility.  At June 30, 2003, the total guaranteed netopen positions were $1.1 million, so the borrowing restriction in Cleco'scredit facility was not affected.  As counterparties and amountstraded change, corresponding changes will be made in the level of guaranteesissued by Cleco Corporation.  It is anticipated that ClecoCorporation's decision to cease speculative trading will decrease the level ofguarantees required as current positions close.  For informationregarding Marketing & Trading's counterparties' right to request ClecoCorporation to provide credit support in certain instances, see "- FinancialCondition - Liquidity and Capital Resources."

56
 
          Thefollowing table summarizes the expected termination date of the guarantees andstandby letter of credit for Cleco:

Amount of  Commitment Expiration Per Period

Commercial  commitments

Net amountcommitted

Less thanone year

1-3 years

4-5 years

Over5 years

(Thousands)

Guarantees

$ 149,750   

$ 128,875        

$          -     

$  7,375     

$ 13,500 

Standby letter of credit

     15,000   

               -        

            -     

            -     

    15,000 

   Total commercial commitments

$ 164,750   

$ 128,875        

$          -     

$  7,375     

$ 28,500 

          The capacityand energy contracts between Cleco Power and Williams Energy stipulate thatCleco Power must provide additional security in the event of certain ratingstriggers.  These triggers include: ratings downgrade below investmentgrade, negative credit watch for possible downgrade below investment grade,failure to make required payments, and failure to maintain a certaindebt-to-equity ratio.  The amount of the additional security requiredto be provided by Cleco Power to Williams Energy in the event of a ratingstrigger is $20.0 million under these contracts.  The contract betweenCleco Power and Dynegy stipulates that Cleco Corporation may be required toprovide additional security in the event of a ratings downgrade belowinvestment grade.  The amount of the additional security that ClecoCorporation could be required to provide to Dynegy is for the full amount ofCleco Power's obligations with respect to the capacity payments for theremainder of the contract.  At June 30, 2003, this amount was $9.3 million.  This obligation, however, may be affected or revoked byvirtue of the fact that Dynegy currently may be in default of its contract obligationto provide additional security in the event of certain credit ratingsdowngrades of Dynegy.

**Environmental Matters**

          Cleco is subject tofederal, state and local laws and regulations governing the protection of theenvironment.  Violations of these laws and regulations may result insubstantial fines and penalties.  Cleco has obtained all materialenvironmental permits necessary for its operations and believes it is insubstantial compliance with these permits, as well as all applicableenvironmental laws and regulations.  Cleco anticipates that existingenvironmental rules will not affect operations significantly, but some capitalimprovements may be required in response to new environmental programs expectedin the near future.

          Under Section 316(b) of the Clean Water Act, EPA is in the process of developing regulations togovern cooling water intake structures at existing power generation facilities.  Thesenew regulations are expected to be published by February 2004 and may requiresome capital improvement to several of Cleco's generation facilities.  UnderSection 112 of the Clean Air Act, EPA is required to develop the Mercury MACTregulations, which are expected to be proposed by December 31, 2003 and finalized by December 31, 2004.  The regulations may require new controls onmercury emissions and may require capital investments to two of Cleco'sgeneration facilities.  Cleco also continues to monitor potentialmulti-pollutant legislation including the President's Clear Skies Initiativewhich is pending in Congress.  The President's Clear Skies Initiativeproposes to cut power plant emissions of three air pollutants - nitrogenoxides, sulfur dioxide, and mercury - by 70% and improve air quality using aproven market-based approach.  The mercury control provisions in themulti-pollutant legislation may replace the Mercury MACT regulations underdevelopment by EPA.

          While it is unknownat this time what the final outcome of these new regulations and the proposedlegislation will be, any capital and operating costs of additional pollutioncontrol equipment that may be required could materially adversely affect futureresults of operations, cash flows, and possibly financial condition unless suchcosts could be recovered through regulated rates.

**Regulatory Matters**

***Fuel Audit***

          In the second halfof 2002, the LPSC informed Cleco Power that it was planning to conduct aperiodic fuel audit.  The audit commenced in March 2003 and includesFuel Adjustment Clause filings for January 2001 through December2002.  The audit, pursuant to the Fuel Adjustment Clause GeneralOrder issued November 6, 1997 in Docket No. U-21497, is required to beperformed no less frequently than every other year; however, this is the firstLPSC Fuel Adjustment Clause audit of ClecoPower.  LPSC-jurisdictional revenue recovered by Cleco Power throughits Fuel Adjustment Clause for the audit period of January 2001 throughDecember 2002 is $567.1 million.  Management is unable to predict theresults of the LPSC fuel audit, which could require Cleco Power to make arefund of previously recovered revenue and could adversely impact theRegistrants' results of operations and financial condition.  The LPSCstaff expects to issue its findings and recommendations related to the fuelaudit by the first quarter of 2004.

57
 
***Review of Trading Activities***

          During a review oftrading activities in the second half of 2002, Cleco identified simultaneousbuy and sell trades with the same counterparty for the same volumes at the sameprice, referred to as "round-trip trades," for both Cleco Power and Marketing& Trading.  The majority of Cleco Power's round-trip tradesinvolved service to a retail industrial customer.  Cleco Power wouldsell power to a third party, which then immediately would sell the same volumeof power at the same price as the purchase price back to Cleco Power which inturn would sell the power to its industrial customer or to others.  Afew of the trades classified as round-trip trades in 1999 included a smallprice difference between the buy and the sell.  Cleco Power hascontacted the FERC and the LPSC and discussed these and other transactions withboth agencies.  These discussions have led to formal investigatoryproceedings with dockets being opened by the FERC and the LPSC, with whichCleco has cooperated.  These proceedings have entailed discoverymeasures by the agencies with jurisdiction over the referenced energy tradingtransactions and energy trading transactions in general between Cleco's powermarketer subsidiaries.  On July 25, 2003, the FERC issued its orderapproving a Consent Agreement between Cleco and the FERC Staff which settledthe FERC's non-public investigation into certaintransactions.  Management is unable to predict the remedial actionsthat may be taken with respect to these transactions by the LPSC and cannotreasonably estimate Cleco's minimum probable contingency for thesetransactions.  For information about the FERC settlement concerningthese transactions, see Note 16 - "Subsequent Events - FERC Settlement" in theNotes to the Unaudited Financial Statements in this Report.

         Marketing & Tradingparticipated in round-trip trades whereby Marketing & Trading would buypower from a third party, and sell the same volume at the same price as thepurchase price back to the third party.  Additionally, Marketing& Trading had round-trip trades whereby Marketing & Trading would sellpower to a third party, which then would sell the same volume at the same priceas the purchase price back to Marketing & Trading.  Marketing& Trading has contacted the FERC regarding its round-trip trades and othertransactions.  These discussions have led to the same investigatoryproceeding with the FERC as referenced above, with which Cleco hascooperated.  Cleco has received requests for information from theCFTC related to Cleco Power's and Marketing & Trading's round-trip tradesand the reporting of trading activities to trade publications.  Clecohas provided the requested information to the CFTC.  From 1999 throughmid-January, 2002, the same personnel performed the trading operations of ClecoPower and Marketing & Trading.  For additional informationregarding the review of trading activities, see Note 5 - "Review of TradingActivities," in the Notes to the Unaudited Financial Statements in thisReport.  Management believes these trading activities may be reviewedin Cleco Power's pending LPSC fuel audit.  For additional informationon the fuel audit, see "- Financial Condition - Regulatory Matters - FuelAudit."  For information about the FERC settlement concerning thisissue, see Note 16 - "Subsequent Events - FERC Settlement" in the Notes to theUnaudited Financial Statements in this Report.

          During 2002,certain fourth quarter 2001 natural gas purchase transactions were identifiedthat were accounted for inconsistently with Cleco Power's fuel adjustmentclause.  For additional information about Cleco Power's natural gaspurchase transactions, see "Management's Discussion and Analysis of FinancialCondition and Results of Operations - Financial Condition - Regulatory Matters- Gas Put Options," on pages 43 and 44 of the 2002 Annual Report toShareholders, which is filed as Exhibit 13 to the Registrants' Form 10-K forthe year ended December 31, 2002.

          During a 2002review of an affiliate transportation contract, Cleco determined that certaingas transportation charges may have exceeded the unregulated subsidiary's cost,plus a reasonable rate of return.  For additional information aboutCleco's gas transportation charges, see "Management's Discussion and Analysisof Financial Condition and Results of Operations - Financial Condition - RegulatoryMatters - Gas Transportation Charges," on page 44 of the 2002 Annual Report toShareholders, which is filed as Exhibit 13 to the Registrants' Form 10-K forthe year ended December 31, 2002.

          Cleco hasimplemented Issue 1 of EITF No. 02-3, as of July 15, 2002, which requires allgains and losses (both realized and unrealized) from energy trading contractsto be reported retroactively on the income statement on a net basis,aggregating revenues and expenses and reporting the number in one lineitem.  Therefore, the effect on its revenues and expenses related tothe round-trip trades has been eliminated through the implementation of Issue 1of EITF No. 02-3.

***Lignite Deferral***

          In May 2001, ClecoPower signed a lignite contract with a miner at the Dolet Hillsmine.  As defined in LPSC Orders No. U-21453, U-20925(SC) andU-22092(SC) (Subdocket G), retail ratepayers are receiving fuel cost savingsequal to 2% of the projected costs under the previous mining contract through2011.  Costs above 98% of the previous contract's projected costs aredeferred.  Deferred costs will be recovered from retail customersthrough the fuel adjustment clause when the actual costs of the new contractare below 98% of the projected costs of the previous contract.  As of June 30, 2003, Cleco Power had deferred

58
 
$9.8 million in costs and interest relating to the newmining contract.  If the miner's cumulative costs do not fall belowthe 98% threshold, Cleco Power may be required to write off some or all of thedeferred amount.  Cleco Power will continue to monitor and assess therecoverability of these amounts on a periodic basis; however, managementexpects the miner's cumulative costs to fall below the 98% threshold, andtherefore, expects Cleco Power to recover the amounts deferred.

***Franchises***

          Cleco Poweroperates under nonexclusive franchise rights granted by governmental units,such as municipalities and parishes (counties), and enforced by stateregulation.  These franchises are for fixed terms, which may varyfrom 10 years to 50 years or more.  In the past, Cleco Power has beensubstantially successful in the timely renewal of franchises as each reachedthe end of its term.

          Cleco Power'sfranchise with the town of Franklinton, and its approximately 1,850 customers,was up for renewal in April 2003.  Cleco made an offer to renew thefranchise in October 2002.  Due to ongoing negotiations, awarding ofany new contract was extended for 120 days beyond the original deadline toAugust 2003.

**Recent Accounting Standards**

          For discussion ofrecent accounting standards, see Note 6 - "Recent Accounting Standards" in theNotes to the Unaudited Financial Statements in this Report.

**Critical Accounting Policies**

          Cleco's criticalaccounting policies are those accounting policies that are both important tothe portrayal of Cleco's financial condition and results of operations and thatrequire management to make difficult, subjective or complex judgments aboutfuture events, which could result in a material impact to the financialstatements of Cleco Corporation's segments or to Cleco Corporation as aconsolidated entity.  The financial statements contained in thisreport are prepared in accordance with accounting principles generally acceptedin the United States of America, which require Cleco to make estimates andassumptions.  Estimates and assumptions about future events and theireffects cannot be made with certainty.  Management bases its currentestimates and assumptions on historical experience and on various other factorsthat are believed to be reasonable under the circumstances.  On anongoing basis, these estimates and assumptions are evaluated and, if necessary,adjustments are made when warranted by new or updated information or a changein circumstances or environment.  Actual results may differ significantlyfrom these estimates under different assumptions or conditions.  Inaddition to the critical accounting policy discussed below, see "Management'sDiscussion and Analysis of Financial Condition and Results of Operations -Critical Accounting Policies" on pages 32-34 of the 2002 Annual Report toShareholders, which is filed as Exhibit 13 to the Registrants' Form 10-K forthe year ended December 31, 2002 for a discussion of other significant criticalaccounting policies.

          Cleco accounts forincome taxes under SFAS No. 109.  Under this method, income taxexpense and related balance sheet amounts are comprised of a "current" portionand a "deferred" portion.  The current portion represents Cleco'sestimate of the income taxes payable or receivable for the current year.  Thedeferred portion represents Cleco's estimate of the future income tax effectsof events that have been recognized in the financial statements or income taxreturns in the current or prior years.  Cleco makes assumptions andestimates when it records income taxes such as its ability to deduct items onits tax returns, the timing of the deduction and the effect of regulation bythe LPSC on income taxes.  Cleco's income tax expense and relatedassets and liabilities could be affected by its assumptions and estimates,changes in such assumptions and estimates, and by ultimate resolution ofassumptions and estimates with taxing authorities.  The actualresults may be different from the estimated results based on these assumptionsand may have a material effect on Cleco's results of operations.  Foradditional information about Cleco Corporation's income taxes, see "Notes tothe Consolidated Financial Statements - Note 10 - Income Tax Expense" on pages71 and 72 of the 2002 Annual Report to Shareholders, which is filed as Exhibit13 to the Registrants' Form 10-K for the year ended December 31, 2002.

59

**ITEM3     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT                   MARKETRISK OF CLECO CORPORATION**

          Themarket risk inherent in Cleco's market risk-sensitive instruments and positionsincludes the potential change arising from changes in interest rates, thecommodity price of power traded on the different power exchanges and thecommodity price of natural gas traded.  Prior to the third quarter of2002, Cleco Power and Marketing & Trading used EITF No. 98-10 to determinewhether the market risk-sensitive instruments and positions were required to bemarked-to-market.  In October 2002, the EITF rescinded EITF No. 98-10effective the second fiscal period beginning after December 15, 2002.  Cleco Power and Marketing & Tradingcurrently use SFAS No. 133 in order to determine whether the marketrisk-sensitive instruments and positions are required to bemarked-to-market.  Generally, Cleco Power's market risk-sensitiveinstruments and positions qualify for the normal-purchase, normal-saleexception to mark-to-market accounting of SFAS No. 133, since Cleco Powergenerally takes physical delivery and the instruments and positions are used tosatisfy customer requirements.  Cleco Power does have some positionsthat are required to be marked-to-market, because they do not meet theexception of SFAS No. 133 and do not qualify for hedge accountingtreatment.  The positions for marketing and trading purposes do notmeet the exemptions of SFAS No. 133 and the net mark-to-market of thosepositions is recorded in income.  Cleco Power has entered into otherpositions to mitigate some of the volatility in fuel costs passed on tocustomers.  These positions are marked-to-market, with the resultinggain or loss recorded on the balance sheet as a component of the accumulateddeferred fuel asset or liability.  When these positions close, actualgains or losses will be included in the Fuel Adjustment Clause and reflected on customers'bills.  Cleco Energy's and Marketing & Trading's positions do notqualify for the exceptions on hedge accounting under SFAS No. 133 and aretherefore marked-to-market.

          Cleco also is subject to market riskassociated with its tolling agreement counterparties.  For additionalinformation concerning Cleco's market risk associated with its counterparties,see "Item 2 Management's Discussion and Analysis of Financial Condition andResults of Operations - Financial Condition - Liquidity and Capital Resources"and Note 16 - "Subsequent Events - Mirant Bankruptcy" in the Notes to theUnaudited Financial Statements in this Report.

          Cleco's exposure tomarket risk, as discussed below, represents an estimate of possible changes inthe fair value or future earnings that would occur, assuming possible futuremovements in the interest rates and commodity prices of power and naturalgas.  Management's views on market risk are not necessarilyindicative of actual results, nor do they represent the maximum possible gainsor losses.  The views do represent, within the parameters disclosed,what management estimates may happen.

***Interest Rate Risks***

          Cleco has enteredinto various fixed- and variable-rate debt obligations.  The calculationsof the changes in fair market value and interest expense of the debt securitiesare made over a one-year period.

          Sensitivity tochanges in interest rates for fixed-rate obligations is computed by calculatingthe current fair market value using a net present value model based upon a 1%change in the average interest rate applicable to suchdebt.  Sensitivity to changes in interest rates for variable-rateobligations is computed by assuming a 1% change in the current interest rateapplicable to such debt.

          As of June 30, 2003, the carryingvalue of Cleco's short-term, variable-rate debt was approximately $77.8million, which approximates the fair market value.  Each 1.0% changein the average interest rates applicable to such debt would result in a changeof approximately $0.8 million in Cleco's pretax earnings.

          At June 30, 2003, Cleco Power hadno short-term, variable-rate debt.

          Cleco monitors itsmix of fixed- and variable-rate debt obligations in light of changing marketconditions and from time to time may alter that mix by, for example,refinancing balances outstanding under its variable-rate credit facility withfixed-rate debt.

***Commodity PriceRisks***

          During the fourthquarter of 2002, Marketing & Trading and Cleco Power discontinuedspeculative trading activities.  All of Marketing & Trading'sremaining trades are marked-to-market as required by SFAS No.133.  Based on market prices at June 30, 2003, Marketing& Trading's net mark-to-market amount of remaining forward tradingpositions was a loss of $0.6

60

million and is recorded on the balancesheet.  The change in the mark-to-market amount between December 31, 2002, and June 30, 2003, was a loss of$0.2 million and was recorded in the income statement.  Due to thechange in trading strategy, commodity price risks have been substantiallymitigated when compared to previous periods.

          Management believesCleco has controls in place to minimize the remaining risks involved intrading.  Controls over trading consist of a back office (accounting)and middle office (risk management) independent of the trading operations,oversight by a risk management committee comprised of officers, and a dailyrisk report which shows VAR and current market conditions.  Cleco'sBoard of Directors appoints the members of the Risk ManagementCommittee.  VAR limits are set and monitored by the Risk ManagementCommittee.

          Cleco Power'sfinancial positions that are not used to meet the power demands of customersare marked-to-market as required by SFAS No. 133.  Based on marketprices at June 30, 2003, the net mark-to-market amount for those positions was aloss of $0.1 million and is recorded on the balance sheet.  Thechange in the mark-to-market amount between December 31, 2002, and June 30, 2003, was a gain of$0.4 million and was recorded in the income statement.

          Cleco Powerprovides fuel for generation and purchases power to meet the power demands ofcustomers.  Cleco Power has entered into positions to mitigate someof the volatility in fuel costs passed on to customers, as encouraged by anLPSC order.  These positions are marked-to-market, with the resultinggain or loss recorded on the balance sheet as a component of the accumulateddeferred fuel asset or liability and a component of the risk management assetor liability.  Based on market prices at June 30, 2003, the net mark-to-marketimpact was a gain of $1.7 million.

          Cleco Energy provides natural gas to wholesale customers, such asmunicipalities, and enters into positions in order to provide fixed gas pricesto some of its customers.  All of Cleco Energy's trades aremarked-to-market as required by SFAS No. 133.  Due to market pricevolatility, mark-to-market reporting may introduce volatility to carryingvalues and hence to Cleco Energy's financial statements.  At June 30, 2003, the netmark-to-market impact had an immaterial effect on the financial statements.

          Marketing &Trading, Cleco Power, and Cleco Energy utilize a VAR model to assess the marketrisk of their trading portfolios, including derivative financialinstruments.  VAR represents the potential loss in fair values for aninstrument from adverse changes in market factors for a specified period oftime and confidence level.  The VAR is estimated using a historicalsimulation calculated daily assuming a holding period of one day, with a 95%confidence level for natural gas and power positions.  Totalvolatility is based on historical cash volatility, implied market volatility,current cash volatility, and option pricing.

          Based on theseassumptions, the high, low and average VAR during the three months and sixmonths ended June 30, 2003, is summarized below:

** **

For the three months ended June 30, 2003

** **

High

Low

Average

** **

(Thousands)

**Marketing  & Trading**

$

4.5   

$

-   

$

1.2   

**Cleco  Power**

$

-   

$

-   

$

-   

**Cleco  Energy**

$

243.0   

$

50.1   

$

101.6   

**Consolidated**

$

247.4   

$

50.1   

$

102.8   

 
For the six months ended June 30, 2003

** **

High

Low

Average

** **

(Thousands)

**Marketing  & Trading**

$

14.6   

$

-   

$

2.5   

**Cleco  Power**

$

7.3   

$

-   

$

0.3   

**Cleco  Energy**

$

259.9   

$

6.7   

$

67.1   

**Consolidated**

$

261.8   

$

6.9   

$

69.8   

61

**          **The increase in VAR at June 30, 2003, comparedto December 31, 2002, as shown below, was primarily due to financial hedgesentered into in the second quarter of 2003 to offset future physical gassales.  These gas sales are to customers with contract entitlement tohedge their future gas cost by locking in specific forward monthly prices basedon perceived market conditions.

** **

AtJune 30, 2003

AtDecember 31, 2002

** **

(Thousands)

**Marketing  & Trading**

$

-     

$

5.7       

**Cleco  Power**

$

-     

$

-       

**Cleco  Energy**

$

225.6     

$

29.3       

**Consolidated**

$

225.6     

$

35.0       

62
 
**ITEM4     CONTROLS AND PROCEDURES**

          In accordance withRules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, the Registrants' management has evaluated, asof the end of the period covered by thisReport, with the participation of the Registrants' chief executive officer andchief financial officer, the effectiveness of the Registrants' disclosurecontrols and procedures (as defined by Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934).  Based on that evaluation, such officers concluded that theRegistrants' disclosure controls and procedures were effective as of the dateof that evaluation.

          During the periodcovered by this Report, there have been no changes to the Registrants' internalcontrol over financial reporting that have materially affected or arereasonably likely to materially affect the Registrants' internal control overfinancial reporting.

63

**PART II - OTHERINFORMATION**

**ITEM 1     LEGAL PROCEEDINGS**

***Cleco***

          Forinformation on legal proceedings affecting Cleco, see Note 5 - "Review of Trading Activities;" Note 11 - "SecuritiesLitigation and Other Commitments and Contingencies;" and Note 16 - "SubsequentEvents - Litigation," in the Notes to the Unaudited Financial Statements, andsee "Management's Discussion and Analysisof Financial Condition and Results of Operations - Financial Condition -Regulatory Matters - Fuel Audit" and "- Review of Trading Activities," inthis Report, which are incorporated herein by reference.

***Cleco Power***

          Forinformation on legal proceedings affecting Cleco Power, see Note 5 - "Review of Trading Activities," and Note 16 - "SubsequentEvents - Litigation," and to the extent that the lawsuits and proceedingsinvolve Cleco Power, Note 11 - "Securities Litigation and Other Commitments andContingencies," in the Notes to the Unaudited Financial Statements, and see "Management's Discussion and Analysis ofFinancial Condition and Results of Operations - Financial Condition -Regulatory Matters - "Fuel Audit," and "- Review of Trading Activities," inthis Report, which are incorporated herein by reference.

**ITEM 3     DEFAULTSUPON SENIOR SECURITIES**

***Cleco***

          The bankruptcyfiling by Mirant and certain of its subsidiaries on July 14, 2003 was an event of default under Perryville's Senior Loan Agreement.  This eventof default gives the lenders holding in aggregate at least 66-2/3% of theoutstanding senior loan the right to declare any outstanding principal andinterest immediately due and payable, which as of June 30, 2003 was $135.7million.  For additional information regarding the default, see Note16 - "Subsequent Events - Mirant Bankruptcy - Perryville's Senior LoanAgreement" in the Notes to the Unaudited Financial Statements in this Report,which is incorporated herein by reference.

**ITEM 4     SUBMISSIONOF MATTERS TO A VOTE OF                     SECURITYHOLDERS**

***Cleco***

          For information onthe results of each proposal presented at the Annual Meeting of Shareholders ofCleco Corporation on April 25, 2003, see Part II, Item 4 of Cleco Corporation'sQuarterly Report on Form 10-Q for the quarterly period ended March 31, 2003.

**ITEM 5     OTHER INFORMATION**

          On July 25, 2003, Larry Westbrook was elected to serve on the Board of Directorsof Cleco Corporation and the Board of Managers of Cleco Power.  Mr.Westbrook will serve on the Audit Committees of such boards.

64
 
**ITEM6     EXHIBITSAND REPORTS ON FORM 8-K**

**a)**

**Exhibits**

** **

Cleco Corporation:

  10(a)

364-Day Credit Agreement dated as of May 7, 2003 among Cleco Corporation, the Bank of New York, as Administrative Agent, and the lenders  and other parties thereto 

  10(c)

Acadia Power Partners - Second amended and restated limited  liability company agreement dated May 9, 2003 

  11

Computation of Net Income Per Common Share for the three  months and six months ended June 30, 2003 and 2002 

  12(a)

Computation of Earnings to Fixed Charges and Earnings to  Combined Fixed Charges and Preferred Stock Dividends for the three-, six- and  twelve-month periods ended June 30, 2003, for Cleco Corporation 

  31(a)

CEO Certification in accordance with section 302 of the  Sarbanes-Oxley Act of 2002 

CFO Certification in accordance with section 302 of the  Sarbanes-Oxley Act of 2002  

  32(a)

CEO Certification pursuant to section 906 of the  Sarbanes-Oxley Act of 2002

CFO Certification pursuant to section 906 of the Sarbanes-Oxley Act of  2002 

  99(a)

Items incorporated by reference from the Registrants'  Combined Annual Report on Form 10-K for the year ended December 31, 2002: "Management's Discussion and Analysis of Financial Condition and Results of  Operations - Financial Condition - Regulatory Matters - Gas Put Options" and "-  Gas Transportation Charges." 

  99(c)

Items incorporated by  reference from the Registrants' Combined Annual Report on Form 10-K for the  year ended December 31, 2002: "Management's Discussion and Analysis of Financial  Condition and Results of Operations - Critical Accounting Policies -  Midstream." 

  99(e)

Stipulation  and Consent Agreement, dated as of July 25, 2003 between Cleco Corporation and certain  of its subsidiaries and the Staff of the Division of Enforcement, Office of  Market Oversight and Investigations of the FERC

Cleco Power:

  10(b)

364-Day Credit Agreement dated as of May 7, 2003 among Cleco Power LLC, the Bank of New York, as Administrative Agent, and the lenders  and other parties thereto 

  12(b)

Computation of Earnings to Fixed Charges for the three-,  six- and twelve-month periods ended June 30, 2003, for Cleco Power 

  31(b)

CEO Certification in accordance with section 302 of the  Sarbanes-Oxley Act of 2002 

CFO Certification in accordance with section 302 of the  Sarbanes-Oxley Act of 2002

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  32(b)

CEO Certification pursuant to section 906 of the  Sarbanes-Oxley Act of 2002

CFO Certification pursuant to section 906 of the Sarbanes-Oxley Act of  2002 

  99(b)

Items incorporated by reference from the Registrants'  Combined Annual Report on Form 10-K for the year ended December 31, 2002: "Management's Discussion and Analysis of Financial Condition and Results of  Operations - Financial Condition - Regulatory Matters - Gas Put Options" and "-  Gas Transportation Charges." 

  99(d)

Items incorporated by  reference from the Registrants' Combined Annual Report on Form 10-K for the  year ended December 31, 2002: "Management's Discussion and Analysis of Financial  Condition and Results of Operations - Critical Accounting Policies - Cleco  Power." 

  99(e)

Stipulation  and Consent Agreement, dated as of July 25, 2003 between Cleco Corporation and certain  of its subsidiaries and the Staff of the Division of Enforcement, Office of  Market Oversight and Investigations of the FERC

**(b)**

**Reports on Form 8-K**

Cleco Corporation:

          On  April 28, 2003, Cleco Corporation filed a Form 8-K dated as of April 23, 2003  relating to the signing of an underwriting agreement providing for the sale  of $100.0 million of its 7.000% Notes due May 1, 2008, and including as  exhibits thereto the underwriting agreement, form of Supplemental Indenture,  form of Notes and an opinion as to the legality of the Notes. 

          On  May 5, 2003, Cleco Corporation filed a Form 8-K dated as of May 2, 2003   concerning the issuance of a press release announcing its signing of a  letter of intent to sell its Perryville facility and including as an exhibit  such press release. 

          On  May 8, 2003, Cleco Corporation filed a Form 8-K dated as of May 8, 2003   concerning the issuance of a press release regarding earnings for the three  months ended March 31, 2003, and including as an exhibit such press release.
      
Cleco Power:

          On  April 28, 2003, Cleco Power LLC filed a Form 8-K dated as of April 23, 2003  relating to the signing of an underwriting agreement providing for the sale  of $75.0 million of its 5.375% Notes due May 1, 2013, and including as  exhibits thereto the underwriting agreement, form of Supplemental Indenture,  form of Notes and an opinion as to the legality of the Notes.
 
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***SIGNATURE***

          Pursuant to therequirements of the Securities Exchange Act of 1934, the Registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

**    CLECO  CORPORATION**

                 (Registrant)

By:   /s/  R. Russell Davis        

        R.  Russell Davis

        Vice  President and Controller

        (Principal  Accounting Officer)

Date: August 11, 2003

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***SIGNATURE***

          Pursuant to therequirements of the Securities Exchange Act of 1934, the Registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

**    CLECO POWER LLC**

                 (Registrant)

By:   /s/ R. Russell  Davis        

        R. Russell  Davis

        Vice  President and Controller

        (Principal  Accounting Officer)

Date: August 11, 2003

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