<PAGE>
 


                               UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                          Washington, D. C.  20549


                                 FORM 10-Q

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

For the quarterly period ended September 30, 1997 Commission file number 1-5663

                                       Or

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

                     Central Louisiana Electric Company, Inc.
             (Exact name of registrant as specified in its charter)

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


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


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

    Indicate by check mark whether the Registrant: (1) has 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
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
                      
                            Yes   X     No      

     As of November 1, 1997 there were 22,461,412 shares outstanding of the
Registrant's Common Stock, par value $2.00 per share.

<PAGE>



                               TABLE OF CONTENTS


                                                                        Page
                                                                        ----
PART I.   FINANCIAL INFORMATION

 Item 1. Financial Statements . . . . . . . . . . . . . . . . . . .       1
           Report of Independent Accountants. . . . . . . . . . . .       2
           Consolidated Statements of Income. . . . . . . . . . . .       3
           Consolidated Balance Sheets. . . . . . . . . . . . . . .       5
           Consolidated Statements of Cash Flows. . . . . . . . . .       7
           Notes to Consolidated Financial Statements . . . . . . .       8
 Item 2. Management's Discussion and Analysis of
         Financial Condition and Results of Operations
           Disclosure Regarding Forward-Looking Statements. . . . .      10  
           Results of Operations. . . . . . . . . . . . . . . . . .      10
           Financial Condition. . . . . . . . . . . . . . . . . . .      13
 Item 3. Quantitative and Qualitative Disclosures About
         Market Risk  . . . . . . . . . . . . . . . . . . . . . . .      15 
 
PART II.  OTHER INFORMATION

 Item 1.  Legal Proceeding  . . . . . . . . . . . . . . . . . . . .      16

 Item 5.  Other Information . . . . . . . . . . . . . . . . . . . .      16
          
 Item 6.  Exhibits and Reports on Form 8-K. . . . . . . . . . . . .      18

SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      19

<PAGE>


                                   PART I

                            FINANCIAL INFORMATION


Item 1.  FINANCIAL STATEMENTS

     The consolidated financial statements for Central Louisiana Electric
Company, Inc. (the Company) included herein are unaudited but reflect, in
management's opinion, all adjustments, consisting only of normal recurring
adjustments, that are necessary for a fair presentation of the Company's
financial position and the results of its operations for the interim periods
presented. Because of the seasonal nature of the Company's business, the
results of operations for the nine months ended September 30, 1997 are not
necessarily indicative of the results that may be expected for the full fiscal
year. The financial statements included herein should be read in conjunction
with the financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996 (1996 Form
10-K).

The consolidated financial statements included herein have been subjected to a
limited review by Coopers & Lybrand L.L.P., independent accountants for the
Company, whose report is included herein.


                                     1

<PAGE>

Coopers                                           certified public accountants
& Lybrand L.L.P.                                  a professional services firm  


                      REPORT OF INDEPENDENT ACCOUNTANTS


Board of Directors
Central Louisiana Electric Company, Inc.:

We have made a review of the consolidated balance sheet of Central Louisiana
Electric Company, Inc. as of September 30, 1997, and the related consolidated
statements of income and cash flows for the three-month and nine-month periods
ended September 30, 1997 and 1996, in accordance with standards established by
the American Institute of Certified Public Accountants.  These financial
statements are the responsibility of the Company's management.

A review of interim financial information consists principally of obtaining an
understanding of the system for the preparation of interim financial
information, applying analytical review procedures to financial data, and
making inquiries of persons responsible for financial and accounting matters.
It is substantially less in scope than an audit in accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for them to
be in conformity with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1996 and the
related consolidated statements of income, cash flows and changes in common
shareholders' equity for the year then ended (not present herein); and in our
report dated January 29, 1997, we expressed an unqualified opinion on those
financial statements.  In our opinion, the information set forth in the
accompanying balance sheet as of December 31, 1996, is fairly stated in all
material respects in relation to the balance sheet from which it has been
derived.


COOPERS & LYBRAND, L.L.P.



New Orleans, Louisiana
October 28, 1997

                                     2 
<PAGE>

<TABLE>

                  CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
                     CONSOLIDATED STATEMENTS OF INCOME
                  For the three months ended September 30
                               (Unaudited)

<CAPTION>

                                            (In thousands, except share and
                                                   per share amounts)
                                                1997               1996
                                             ----------         ----------
<S>                                          <C>                <C>         
OPERATING REVENUES                           $  138,099         $  130,477 
                                             ----------         ----------

OPERATING EXPENSES                                                       
  Fuel used for electric generation              44,607             40,310
  Power purchased                                10,171             12,443
  Other operation                                16,242             14,699
  Maintenance                                     5,308              5,837
  Depreciation                                   11,609             10,564
  Taxes other than income taxes                   9,161              8,117
  Federal and state income taxes                 12,377             11,317
                                             ----------         ----------
                                                109,475            103,287
                                             ----------         ----------
OPERATING INCOME                                 28,624             27,190

Allowance for other funds used during
  construction                                      171                637
Other income and expenses, net                    1,033                206
                                             ----------         ----------
INCOME BEFORE INTEREST CHARGES                   29,828             28,033

Interest charges, including amortization of
  debt expense, premium and discount              7,124              7,047
Allowance for borrowed funds used during
  construction                                     (184)                86
                                             ----------         ----------
NET INCOME                                       22,888             20,900

Preferred dividend requirements, net                528                521
                                             ----------         ----------
NET INCOME APPLICABLE TO COMMON STOCK        $   22,360         $   20,379
                                             ==========         ==========

WEIGHTED AVERAGE COMMON SHARES                                           
  Primary                                    22,467,560         22,452,482
  Fully diluted                              23,864,477         23,856,511

EARNINGS PER SHARE
  Primary                                         $1.00              $0.91
  Fully diluted                                   $0.95              $0.87

CASH DIVIDENDS PAID PER SHARE                     $0.395             $0.385

<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>
</TABLE>

                                     3
<PAGE>

<TABLE>

                  CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
                     CONSOLIDATED STATEMENTS OF INCOME
                   For the nine months ended September 30
                               (Unaudited)

<CAPTION>

                                          (In thousands, except share and
                                                 per share amounts)
                                              1997               1996
                                           ----------         ----------
<S>                                        <C>                <C>
OPERATING REVENUES                         $  341,091         $  342,822 
                                           ----------         ----------

OPERATING EXPENSES
  Fuel used for electric generation            99,574             94,285
  Power purchased                              31,777             41,375
  Other operation                              46,357             46,673
  Restructuring charge                          1,891                
  Maintenance                                  17,072             16,264
  Depreciation                                 34,321             31,893
  Taxes other than income taxes                26,152             23,085
  Federal and state income taxes               22,066             23,744
                                           ----------         ----------
                                              279,210            277,319
                                           ----------         ----------
OPERATING INCOME                               61,881             65,503

Allowance for other funds used during
  construction                                    297                941
Other income and expenses, net                  1,061                492
                                           ----------         ----------
INCOME BEFORE INTEREST CHARGES                 63,239             66,936

Interest charges, including amortization of
  debt expense, premium and discount           21,650             21,959
Allowance for borrowed funds used during
  construction                                    (94)              (496)
                                           ----------         ----------
NET INCOME                                     41,683             45,473

Preferred dividend requirements, net            1,577              1,552
                                           ----------         ----------
NET INCOME APPLICABLE TO COMMON STOCK      $   40,106         $   43,921
                                           ==========         ==========

WEIGHTED AVERAGE COMMON SHARES
  Primary                                  22,465,705         22,450,781
  Fully diluted                            23,864,181         23,856,339

EARNINGS PER SHARE
  Primary                                       $1.79              $1.96
  Fully diluted                                 $1.73              $1.89

CASH DIVIDENDS PAID PER SHARE                  $1.175            $1.145

<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>
</TABLE>

                                     4
<PAGE>

<TABLE>
 
                   CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
                        CONSOLIDATED BALANCE SHEETS
                               (Unaudited)

<CAPTION>

                                                    (In thousands)
                                      September 30, 1997      December 31, 1996
                                      ------------------      -----------------
                   ASSETS                                                      
<S>                                   <C>                     <C>             
Utility plant
  Property, plant and equipment        $       1,437,108       $      1,379,035
  Accumulated depreciation                      (501,071)              (475,212)
                                       -----------------       ----------------
                                                 936,037                903,823
  Construction work-in-progress                   42,386                 49,075
                                       -----------------       ----------------
     Total utility plant, net                    978,423                952,898
                                       -----------------       ----------------
Investments and other assets                       2,907                  8,488
                                       -----------------       ----------------
Current assets 
  Cash and cash equivalents                       21,972                 20,307
  Accounts receivable, net                        53,399                 43,912
  Unbilled revenues                               12,927                 11,193
  Fuel inventory, at average cost                  8,528                  9,366
  Materials and supplies
     inventory, at average cost                   15,436                 17,029
  Accumulated deferred fuel                        1,877
  Prepayments and other current assets             2,466                  2,505
                                       -----------------       ----------------
     Total current assets                        116,605                104,312
                                       -----------------       ----------------

Prepayments                                        8,725                  8,683
Regulatory assets - deferred taxes               102,885                103,839
Other deferred charges                            70,054                 69,320
Accumulated deferred federal and
  state income taxes                              79,157                 74,231
                                       -----------------       ----------------
     TOTAL ASSETS                      $       1,358,756       $      1,321,771
                                       =================       ================

<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>

                            (Continued on next page)

</TABLE>

                                        5
<PAGE>
            

<TABLE>

                    CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
                    CONSOLIDATED BALANCE SHEETS (Continued)
                                (Unaudited)

<CAPTION>                                                      
         
                                                     (In thousands,        
                                                  except share amounts)
                                         September 30, 1997   December 31, 1996
                                         ------------------   -----------------

      CAPITALIZATION AND LIABILITIES
<S>                                        <C>                 <C>
Common shareholders' equity                                    
  Common stock, $2 par value, authorized                       
  50,000,000 shares, issued 22,761,254                         
  and 22,760,154 shares at September 30,                             
  1997 and December 31, 1996, respectively  $     45,522        $       45,520
  Premium on capital stock                       113,722               113,702
Retained earnings                                254,125               240,414
Treasury stock at cost, 299,049 and
   307,577 shares at September 30, 1997
   and December 31, 1996, respectively            (6,069)               (6,242)
                                         ---------------      ---------------- 
                                                 407,300               393,394
                                         ---------------      ----------------
Preferred stock, cumulative, $100 par value
  Not subject to mandatory redemption             30,102                30,280
  Deferred compensation related to 
     preferred stock held by ESOP                (19,013)              (20,751)
                                         ---------------      ----------------
                                                  11,089                 9,529
  Subject to mandatory redemption                  6,260                 6,372
                                         ---------------      ----------------
                                                  17,349                15,901
                                         ---------------      ----------------
Long-term debt, net                              365,888               340,859
                                         ---------------      ----------------
  Total capitalization                           790,537               750,154
                                         ---------------      ----------------
Current liabilities
  Short-term debt                                 47,344                65,161
  Long-term debt due within one year              15,000                15,000
  Accounts payable                                35,620                50,022
  Customer deposits                               20,183                19,761
  Taxes accrued                                   39,461                 5,806
  Interest accrued                                 1,604                 7,521
  Accumulated deferred fuel                                              2,168
  Other current liabilities                        3,518                 3,252
                                         ---------------      ----------------
    Total current liabilities                    162,730               168,691
                                         ---------------      ----------------
Deferred credits                           
  Accumulated deferred federal and state 
     income taxes                                281,919               281,684
  Accumulated deferred investment tax    
     credits                                      30,021                31,364
  Regulatory liabilities - deferred credits       61,693                60,058
  Other deferred credits                          31,856                29,820
                                         ---------------      ----------------
    Total deferred credits                       405,489               402,926
                                         ---------------      ----------------
   TOTAL CAPITALIZATION AND LIABILITIES  $     1,358,756      $      1,321,771
                                         ===============      ================

<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>
</TABLE>

                                     6

<PAGE>

<TABLE>

                    CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                     For the nine months ended September 30
                                (Unaudited)

<CAPTION>
 
                                                           (In thousands)
                                                         1997           1996
                                                      ----------     ---------- 
<S>                                                   <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                          $   41,683     $  45,473
  Adjustments to reconcile net income
   to net cash provided by operating activities
     Depreciation and amortization                        35,673        32,722
     Allowance for funds used during construction            391        (1,437)
     Amortization of investment tax credits               (1,343)       (1,357)
     Deferred income taxes                                (2,083)        1,500
     Deferred fuel costs                                  (4,045)          928
     Restructuring charge                                  1,632   
     (Gain) loss on disposition of utility plant, net       (236)            1
  Changes in assets and liabilities
     Accounts receivable, net                             (9,487)       (5,961)
     Unbilled revenues                                    (1,734)       (1,616)
     Fuel inventory, materials and supplies                2,431        (1,474)
     Accounts payable                                    (16,034)      (21,345)
     Customer deposits                                       422            98
     Other deferred accounts                               1,824          (244)
     Taxes accrued                                        33,655        25,335
     Interest accrued                                     (5,917)       (6,136)
  Other, net                                               9,189        (1,792)
                                                      ----------    ----------
     Net cash provided by operating activities            82,373        64,695
                                                      ----------    ----------
CASH FLOWS FROM INVESTING ACTIVITIES
  Additions to utility plant                             (59,640)      (46,227)
  Allowance for funds used during construction              (391)        1,437
  Sale of utility plant                                      371           420
  Purchase of investments                                   (222)         (200)
  Sale of investments                                          1           445
                                                      ----------    ----------
     Net cash used in investing activities               (59,881)      (44,125)
                                                      ----------    ----------
CASH FLOWS FROM FINANCING ACTIVITIES
  Issuance of common stock                                    22            67
  Reacquisition of common stock                                             (2)
  Issuance of long-term debt                              40,000        25,000
  Retirement of long-term debt                           (15,000)      (25,000)
  Increase (decrease) in short-term, net                 (17,817)        8,435
  Issuance of preferred stock                                178
  Redemption of preferred stock                             (237)          (40)
  Dividends paid on common and preferred stock,net       (27,973)      (27,246) 
                                                      ----------    ----------
     Net cash used in financing activities               (20,827)      (18,786)
                                                      ----------    ---------- 

NET INCREASE IN CASH AND CASH EQUIVALENTS                  1,665         1,784
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD          20,307        20,621  
                                                      ----------    ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD            $   21,972    $   22,405
                                                      ==========    ==========

Supplementary cash flow information
   Interest paid (net of amount capitalized)          $   27,709    $   27,921
                                                      ==========    ==========
   Income taxes paid                                  $    9,876    $    7,817 
                                                      ==========    ==========

<FN>
The accompanying notes are an integral part of the consolidated financial 
statements.
</FN>
</TABLE>

                                      7
<PAGE>
 

                     CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (UNAUDITED)

Note A.  Reclassification

Certain prior-period amounts have been reclassified to conform with the
presentation shown in the current year's financial statements. These
reclassifications had no effect on net income applicable
to common stock or common shareholders' equity.

Note B.  Acquisition of Teche Electric Cooperative, Inc.

In February 1995, Teche Electric Cooperative, Inc. (Teche) and the Company
executed a Purchase and Sale Agreement whereby the parties agreed that the
Company would purchase all of the assets of Teche for a purchase price,
including the Company's assumption or other discharge of Teche's liabilities,
of approximately $22.4 million. The Company closed the purchase of Teche on
September 30, 1997. The purchase of Teche's assets and assumption of Teche's
liabilities are reflected in the Company's third quarter financial statements.
The effects of the additional revenues, depreciation and expenses associated
with the operation of the former Teche electric system will be reflected in the
Company's results of operation beginning October 1, 1997.

Note C.  Restructuring Charge

During the second quarter of 1997, the Company reorganized the electric
production section of its generation services.  The primary objective of this
reorganization was to create a centralized power production maintenance
function.  Other initiatives included improving power production operations
and providing better services to customers.  As a result, approximately 30
employee positions were eliminated resulting in a charge to earnings which is
estimated to be $1,891,000 ($1,248,000 on an after-tax basis), consisting
mainly of voluntary severance programs offered to eligible employees.

Note D.  Legal Proceeding:  Fuel Supply - Lignite

The Company and Southwestern Electric Power Company (SWEPCO), each a 50% owner
of Dolet Hills Power Station Unit 1 (Dolet Hills Unit 1), jointly own lignite
reserves in the Dolet Hills area of northwestern Louisiana.  In 1982 the
Company and SWEPCO entered into a Lignite Mining Agreement (LMA) with the Dolet
Hills Mining Venture (DHMV), a partnership for the mining and delivery of
lignite from a portion of these reserves (Dolet Hills Mine).  The LMA expires
in 2011. The price of lignite delivered pursuant to the LMA is a base price per
ton, subject to escalation based on certain inflation indices, plus specified
"pass-through" costs.

Currently, the Company is receiving annually a minimum delivery of 1,187,500
tons under the LMA. Since the late 1980s, additional spot lignite deliveries
have been obtained through competitive bidding from DHMV and another lignite
supplier.  In 1996 the Company and SWEPCO received deliveries which
approximated 24% of the annual lignite consumption at Dolet Hills Unit 1 from
the other lignite supplier.


                                      8
<PAGE>


On April 15, 1997, the Company and SWEPCO filed suit against DHMV and its
partners in the United States District Court for the Western District of
Louisiana (Federal Court Suit) seeking to enforce various obligations of DHMV
to the Company and SWEPCO under the LMA, including provisions relating to the
quality of the delivered lignite, pricing, and mine reclamation practices. On
June 15, 1997, DHMV filed an answer denying the allegations in the Company's
suit and filed a counterclaim asserting various contract-related claims against
the Company and SWEPCO. The Company and SWEPCO have denied the allegations in
the counterclaims on the grounds the counterclaims have no merit.

The counterclaims filed by DHMV in the Federal Court Suit resulted in the
Company and SWEPCO filing a separate lawsuit against the parent companies of
DHMV, namely Jones Capital Corporation and Philipp Holzmann USA, Inc., on
August  13, 1997, in the First Judicial District  Court for Caddo Parish,
Louisiana (State Court Suit).  The State Court Suit seeks to enforce a separate
1995 agreement by Jones Capital Corporation and Philipp Holzmann USA, Inc.
related to the LMA.  Jones Capital Corporation and Philipp Holzmann USA, Inc.
have asked the State Court to stay that proceeding until the Federal Court Suit
is resolved.

The suits are currently in the discovery phase. At DHMV's request, negotiations
among DHMV, SWEPCO and the Company have been terminated.  A status conference
is currently scheduled for May 22, 1998.  At this conference, a trial date will
be set.  The Company and SWEPCO will aggressively prosecute the claims against
DHMV and defend against the counterclaims which DHMV has asserted.  The Company
and SWEPCO continue to pay DHMV for lignite delivered pursuant to the LMA. 
Normal day-to-day operations continue at the Dolet Hills Mine and Dolet Hills
Unit 1.  Although the ultimate outcome of this litigation cannot be predicted
at this time, based on information currently available to the Company,
management does not believe that the counterclaims asserted by the DHMV in the
Federal Court Suit will have a significant adverse effect on the Company's
financial position or results of operations.


                                     9

<PAGE>
 

                    CENTRAL LOUISIANA ELECTRIC COMPANY, INC.

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL             
        CONDITION AND RESULTS OF OPERATIONS

   The following discussion and analysis should be read in combination with
Management's Discussion and Analysis of Financial Condition and Results of
Operations in Item 7 of the 1996 Form 10-K, the financial statements and notes
contained in Item 8 of the 1996 Form 10-K and the interim financial statements
and notes thereto contained elsewhere in this Report.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

   This Report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended.  All statements other than
statements of historical fact included in this Report, including, without
limitation, the statements under "--Financial Condition --Regulatory Matters
--Retail Electric Competition," "--Wholesale Electric Competition," "Other
Information--Acquisition of Teche Electric Cooperative, Inc.," "--Joint Venture
with Covenant Energy Corporation" and "Legal Proceeding -- Fuel Supply -
Lignite" regarding  the effect of certain proposed legislation, the effect
of a regional open access tariff, the impact of the Teche acquisition, the
impact of the Company's joint venture with Covenant Energy Corporation, the
impact of certain legal proceedings involving the Company, and other matters,
are forward-looking statements.  Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, such
forward-looking statements are based on numerous assumptions (some of which may
prove to be incorrect) and are subject to risks and uncertainties which could
cause the actual results to differ materially from the Company's expectations.
Such risks and uncertainties include, without limitation, the effects of
competition in the power industry, legislative and regulatory changes affecting
electric utilities, fluctuations in the weather and changes in general economic
and business conditions, as well as other factors discussed in this and the
Company's other filings with the Securities and Exchange Commission (Cautionary
Statements).  All subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by the Cautionary Statements.

RESULTS OF OPERATIONS

For the Three Months Ended September 30, 1997
---------------------------------------------

   Net income applicable to common stock totaled $22.4 million or $1.00 per
share for the third quarter of 1997, as compared to $20.4 million or $0.91 per
share for the corresponding period in 1996.  The following principal factors
contributed to these results:

Operating revenues for the quarter increased $7.6 million or 5.8% compared to
the same period in 1996, due to an increase in kilowatt-hour sales to all
classes of customers resulting from warmer weather during the third quarter of
1997.  Fuel cost recovery revenues for the third quarter of 1997 were $0.9
million more than the third quarter of 1996.  This increase is primarily
attributable to higher natural gas prices in effect during the third quarter of

                                     10
<PAGE>


1997 compared to the same period in 1996.  Changes in fuel cost have
historically had no effect on net income, as fuel costs are generally
recovered through a fuel cost adjustment clause that enables the Company to
pass on to customers substantially all changes in the cost of generating fuel
and purchased power.  These adjustments are audited monthly and are regulated
by the Louisiana Public Service Commission (LPSC) (representing about 99% of
the total fuel cost adjustment) while the remaining portion, regulated by the
Federal Energy Regulatory Commission (FERC), is audited periodically for
several years at a time.  Until approval is received, the adjustments are
subject to refund.

Base revenues increased $6.7 million during the third quarter of 1997 compared
to the corresponding period in 1996.  The increase in base revenues is
primarily the result of an increase in kilowatt-hour sales to residential
customers.  The demand for electricity by residential customers, especially
during the summer months, is affected by the weather.  Hot summers increase
customer demand while milder, cooler weather reduces demand.  Weather during
the third quarter of 1997 was 16% warmer than the third quarter of 1996 and 11%
warmer than normal as measured by degree day calculations. Kilowatt-hour sales
to regular customers improved 8.3% over the third quarter of 1996.  Sales to
residential customers increased 9.4%, sales to commercial customers rose 5.1%
and sales to industrial customers improved 7.4% over the third quarter of 1996.
 Base revenues were negatively affected by the $3.0 million reduction of the
Company's annual base rate tariff for electric service effective November 1,
1996, as part of the Company's October 1996 LPSC earnings review settlement.
In January 1998, the Company's annual base rate tariff for electric service
will be reduced by an additional $2.0 million.  See "Management's Discussion
and Analysis of Results of Operations and Financial Condition - Financial
Condition - Retail Rates" in Item 7 of the 1996 Form 10-K for discussion of
the settlement.

Operating expenses increased $6.2 million, or 6.0%, during the third quarter of
1997 compared to the same period in 1996.  The rise in operating expenses is
the result of increases in the cost of fuel used for electric generation, other
operation expenses, depreciation, taxes other than income taxes and federal and
state income taxes; partially offset by a decrease in the amount of purchased
power and maintenance expenses.  The increase in the cost of fuel used for
electric generation and purchased power is primarily attributable to
fluctuations in the Company's generation mix, higher fuel costs, availability
of economy power and deferral of expenses for recovery from customers through
fuel adjustment clauses in subsequent months, as compared to the same period in
1996. The increase in the cost of  fuel used for electric generation results
from higher natural gas prices in effect during the third quarter of 1997 as
compared to natural gas prices in effect during the corresponding period in
1996.  The Company purchases electric energy from other electric power
generators when the price of the energy purchased is less than the cost to the
Company of generating such energy from its own facilities.  Sixteen percent of
the Company's energy requirements during the third quarter of 1997 were met
with purchased power, compared to 25% for the corresponding period in 1996. 
Other operation expenses increased $1.5 million, or 10.5%, compared to the same
period in 1996, primarily due to costs associated with employee pension and
benefit plans.  Depreciation expense grew $1.0 million compared to the same
period in 1996, primarily due to the additions to the Company's energy control
center being placed into service in late 1996.  Taxes other than income taxes
rose $1.0 million compared to the same period in 1996, primarily resulting from
the expiration of a ten-year property tax exemption on a lignite-fired
generating unit built in 1986.  See "Management's Discussion and Analysis of
Results of Operations and Financial Condition - Results of Operations - Nonfuel
Operating Expenses and Income Taxes" in Item 7 of the 1996 Form 10-K for a

                                     11
<PAGE>
 

discussion of the expiration of the property tax exemption.  Federal and state
income taxes increased $1.1 million, or 9.4%, compared to the corresponding
period in 1996 resulting from higher taxable income in 1997.  Maintenance
expenses decreased $0.5 million primarily due to reduced right-of-way
reclearing activities by the Company during the third quarter of 1997 compared
to the third quarter of 1996.

For the Nine Months Ended September 30, 1997
--------------------------------------------

   Net income applicable to common stock totaled $40.1 million or $1.79 per
share for the first nine months of 1997, as compared to $43.9 million or $1.96
per share for the corresponding period in 1996.  Net income applicable to
common stock for the 1997 period was affected by a restructuring charge of $1.9
million ($1.2 million net-of-tax) or $0.05 per share.  The following principal
factors also contributed to these results:

Operating revenues for the first nine months of 1997 decreased $1.7 million, or
0.5%, compared to the same period in 1996, due to a decrease in collection of
fuel cost recovery revenues partially offset by an increase in base revenues.
Fuel cost recovery revenues for the first nine months of 1997 were $4.9 million
less than the same period of 1996.  Although fuel costs in 1997 are higher than
fuel costs in 1996, these increases in fuel costs have not been recovered from
customers through fuel adjustment clauses.  This under-recovery of fuel costs
will be collected from customers in subsequent months through normal fuel
surcharge calculations.

Base revenues increased $3.2 million during the first nine months of 1997
compared to the corresponding period in 1996.  The increase in base revenues is
primarily the result of an increase in kilowatt-hour sales to all classes of
customers except residential.  Demand for electricity by commercial and
industrial customers is primarily dependent upon the strength of the economy in
the Company's service territory, and is not greatly affected by the weather. 
Sales to commercial and industrial customers rose 2.9% and 5.0%, respectively,
over the first nine months of 1996.  Residential customers' demand for
electricity is affected by various weather conditions.  Hot summers and cold
winters increase customer demand while cool summers and warm winters reduce
customer demand. Weather, as measured by degree day calculations, during
the first nine months of 1997 was slightly milder than the corresponding
period of 1996.  A milder winter during the beginning of 1997 offset the 
warmer summer of 1997.  Sales to residential customers remained relatively flat
compared to the first nine months of 1996.  Kilowatt-hour sales to regular
customers improved 2.4% over the first nine months of 1996.  Base revenues were
negatively affected by the $3.0 million reduction of the Company's annual base
rate tariff for electric service effective November 1, 1996, as part of the
Company's October 1996 LPSC earnings review settlement.

Operating expenses increased $1.9 million, or 0.7%, for the first nine months
of 1997 compared to the corresponding period in 1996.  The increase in
operating expenses is the result of increases in the cost of fuel used for
electric generation, maintenance expenses, depreciation, taxes other than
income taxes and a restructuring charge relating to the reorganization of the
Company's electric production section of its generation services.  These
increases were partially offset by decreases in the amount of purchase power,
other operation expenses, and federal and state income taxes. The decrease in
the fuel costs used for electric generation and purchased power is primarily
attributable to fluctuations in the Company's generation mix, higher fuel
costs, availability of economy power and deferral of expenses for recovery from

                                      12
<PAGE>

customers through fuel adjustment clauses in subsequent months, as compared to
the same period in 1996.  The increase in the cost of  fuel used for electric
generation results from higher natural gas prices in effect during 1997 as
compared to natural gas prices in effect during 1996.  Twenty-two percent of
the Company's energy requirements during the first nine months of 1997 were met
with purchased power, compared to 30% for the corresponding period in 1996.  A
restructuring of the Company's generation services business resulted in a
one-time pre-tax charge of $1.9 million related to severance payments.
Maintenance expenses increased $0.8 million, or 5.0%, as a result of increased
right-of-way reclearing activities in 1997 compared to 1996. Depreciation
expense increased $2.4 million and taxes other than income taxes rose $3.1
million compared to the same period in 1996, for the same reasons as the
results for the three months ended September 30, 1997, discussed above.  Other  
operation expenses decreased $0.3 million primarily due to a decrease in
distribution operation expenses partially offset by an increase in customer
sales and service expenses.  Federal and state income taxes declined $1.7
million, or 7.1%, due to lower taxable income in 1997 compared to the same
period in 1996.

FINANCIAL CONDITION

Liquidity and Capital Resources
-------------------------------

   At December 31, 1996, the Company had reduced to zero the amount of
receivables that had been sold under a program which allowed it to sell, on an
ongoing basis, up to $35 million of eligible accounts receivable.  During the
quarter ended March 31, 1997, the Company terminated the accounts receivable
program.

With the termination of the receivables program, the Company increased the
amount of short-term debt it could borrow by putting in place an additional $25
million revolving credit facility with a scheduled termination date of March
19, 1998.  An existing $100 million revolving credit facility is scheduled to
terminate on June 15, 2000.  Both facilities provide support for the issuance
of commercial paper and working capital needs.  Uncommitted lines of credit
with banks totaling $20 million are also available to support working capital
needs.

On August 15, 1997, the Company issued $25 million of unsecured, noncallable,
medium-term notes, which are due December 14, 2007, at an interest rate of
7.00%.  The notes were issued to finance the Teche acquisition, which was
consummated on October 1, 1997.  As of  November 15, 1997, the Company had $140
million of debt issuance capability remaining under its medium-term note shelf
registration statement on file with the Securities and Exchange Commission.

At September 30, 1997 and 1996, the Company had $47.3 million and $31.5
million, respectively, of short-term debt outstanding in the form of commercial
paper borrowings and bank loans. Much of this increase was due to the
utilization of short-term debt to replace the sale of the accounts receivable
program discussed above. 

At September 30, 1997, an unregulated consolidated subsidiary of the Company
had $13.8 million of cash and temporary cash investments in securities with
original maturities of 90 days or less, but the Company committed these funds
for use as a credit facility to CLECO ENERGY L.L.C.  See Item 5 in Part II of
this Report for additional information relating to the Joint Venture with
Covenant Energy Corporation.

                                     13
<PAGE>
   
 
Regulatory Matters - Retail Electric Competition
------------------------------------------------

   The LPSC has set a generic docket, number U-21453, to investigate whether
retail choice is in the best interests of Louisiana electric utility consumers.
In March 1997, the LPSC consolidated portions of  pre-existing, separate
elctric utility company dockets that involved issues of retail customer choice
into the generic docket.  The Company and a number of parties, including the
other Louisiana electric utilities, certain power marketing companies and
various associations representing industry and consumers, filed testimony with
the LPSC in September 1997. In October 1997, the Company, along with other
interested parties, participated in testimony before the LPSC. The Company has
taken the position that it favors retail choice no later than the year 2001 and
that it opposes a stranded cost recovery mechanism that would lead to
higher-cost suppliers gaining an advantage when competing for new business.

In May 1997, the Commerce Committee of the Louisiana House of Representatives
deferred any action on legislation regarding deregulation/customer choice of
the electric utility industry in Louisiana. The legislators determined that the 
issues surrounding deregulation should be left to the LPSC. However, the
legislature passed a resolution establishing a special committee to study
existing federal, state, and local laws, rules and policies to assess the
impact of electric retail competition.  The committee held its first meeting
during October 1997 and must submit a report of its findings by the 1998
regular legislative session.  The Company has one representative on this
committee.

Various federal and state legislative and regulatory bodies are considering a
number of issues in addition to those discussed above that will shape the
future of the electric utility industry.  Such issues include deregulation of
retail electricity sales; the ability of electric utilities to recover
stranded costs; the repeal or modification of the Public Utility Holding
Company Act of 1935; the unbundling of vertically integrated electric utility
companies into separate business segments or companies  (i.e., generation,
transmission, distribution and retail energy services); the role of electric
utilities, independent power producers  and competitive bidding in the
construction and operation of new generating capacity; and the pricing of
transmission service on an electric utility's transmission system.  The Company
is unable to predict the outcome of such issues or their effect on the
Company's financial position, results of operations or cash flows.

Regulatory Matters - Wholesale Electric Competition
---------------------------------------------------

   The Company is a member of the Southwest Power Pool (SPP).  The SPP plans to
file a regional open access tariff with the FERC by January 1, 1998, with a
requested effective date of April 1998. The Company has not yet signed an
agency agreement allowing the Company to participate in the tariff. The tariff,
if approved, would begin to charge for wholesale energy transactions that induce
loop flows in adjoining transmission systems. The operation of adjoining
transmission systems at times may affect the Company's ability to transmit
power. The Company expects that a number of parties will intervene in the FERC
proceedings and expects delays in the effective date. Since revenues and
charges depend upon the nature and extent of wholesale transactions by the
Company and by adjoining systems, the effects of this tariff, if approved,
cannot be determined at this time. Entergy Corporation has advised the SPP that
Entergy and its operating companies are withdrawing their memberships from the

                                     14
<PAGE>


SPP effective December 31, 1997. In addition, 15 other parties have advised the 
SPP of their intention to withdraw from the SPP effective December 31, 1997.

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

   Not Applicable.

                                     15 
<PAGE>

                                  PART II

                             OTHER INFORMATION

Item 1.  LEGAL PROCEEDING

   For a discussion of certain legal proceedings involving the Company and the
Dolet Hills Mining Venture, a partnership that is a party to a Lignite Mining
Agreement with the Company and Southwestern Electric Power Company, see Note D
to the Consolidated Financial Statements contained elsewhere in this Form 10-Q,
which Note is incorporated herein by reference.

Item 5.  OTHER INFORMATION

New Accounting Standards

   In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards "SFAS No. 128, Earnings Per Share" effective
for financial statements issued for periods ending after December 15, 1997.
Management believes adoption of this statement will not have a significant
effect on the Company's earnings per share.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards "SFAS No. 130, Reporting Comprehensive Income"
effective for fiscal years beginning after December 15, 1997.  Management
believes adoption of this statement will affect only financial statement
presentation and will not affect the Company's financial position or results of
operations.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards "SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information" effective for financial statements for
periods beginning after December 15, 1997.  Management believes adoption of
this statement will affect only  financial statement disclosure and will not
affect the Company's financial position or results of operations.  This
Statement need not be applied to interim financial statements in the initial
year of its application, but comparative information for interim periods in the
initial year of application is to be reported in financial statements for
interim periods in the second year of application.

Acquisition of Teche Electric Cooperative, Inc.

   On September 30, 1997, the Company acquired substantially all of the assets
of Teche Electric Cooperative, Inc. (Teche). One of the conditions precedent to
the closing of the Teche acquisition was the execution of an interim power
purchase agreement with Cajun Electric Power Cooperative, Inc. (Cajun), Teche's
former wholesale power supplier. An interim agreement, acceptable to Cajun's
bankruptcy trustee and the Rural Utilities Service, was reached in September
1997. Based on Teche's kilowatt-hour sales during the first nine months of 
1997, Teche's sales are expected to increase the Company's kilowatt-hour sales
to regular customers by 2% to 3%. The initial costs to acquire and operate
Teche may reduce the Company's annual earnings by an estimated two cents per
average common share in 1997. The effect of the Teche acquisition on the
Company's results of operations may vary materially from the Company's current
expectations depending upon customer growth in Teche's former service area,
legislative and regulatory changes affecting electric utilities, the timing of
the conclusion of Cajun's bankruptcy and the ability of the Company to

                                    16
<PAGE>


negotiate a new power purchase agreement with Cajun's successor.

Fuel Supply - Coal

   The majority of the coal for Rodemacher Power Station Unit 2 (Rodemacher
Unit 2) is purchased under a long-term contract with Kerr-McGee Coal
Corporation from a mine in Wyoming. The Company has a 30% interest in the
capacity of Rodemacher Unit 2.  The coal is transported under a long-term rail
transportation contract with the Union Pacific Railroad.  Union Pacific is
currently experiencing operating problems resulting in reduced volumes
delivered to Rodemacher Unit 2.  Consequently, the Company's coal inventory is
currently below the Company's desired minimum level. Based on the anticipated
delivery schedule of future coal shipments, management does not expect that
Rodemacher Unit 2 operations will need to be curtailed due to fuel supply. The
Company is closely monitoring this situation and has scheduled a meeting with
Union Pacific in November to address delivery schedules.  Other regional
utilities are experiencing similar delivery problems.

Joint Venture with Covenant Energy Corporation

   On October 30, 1997, the Company and Covenant Energy Corporation (Covenant)
entered into a joint venture to market electricity and natural gas services, as
well as energy management services to commercial and industrial customers and
utilities throughout the southeastern United States, and to engage in energy
asset development projects, such as cogeneration projects, natural gas
pipelines connecting to customers' plants and certain strategic asset
acquisitions in the southeastern United States.  The newly formed venture is
named CLECO ENERGY, L.L.C. and is headquartered in Houston, Texas. Covenant
President John T. McDougal heads CLECO ENERGY, L.L.C.

An unregulated subsidiary of the Company owns 51% of the newly formed venture
and Covenant owns the remaining 49%. The venture's effect on the Company's
results of operations may vary materially depending upon such factors as the
growth and expansion of the commercial and industrial sector within the
southeastern United States, the venture's ability to penetrate existing energy
markets, opportunities relating to the acquisition or construction of natural
gas pipeline projects, and the venture's ability to successfully negotiate
cogeneration projects.


 
                                      17
<PAGE>

Item 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits

               11    Computation of Net Income Per Common Share for the three
                     and nine months ended September 30, 1997 and September 30,
                     1996

               12    Computation of Earnings to Fixed Charges and Earnings to
                     Combined Fixed Charges and Preferred Stock Dividends for
                     the twelve months ended September 30, 1997
       
               15    Awareness letter, dated November 12, 1997, from Coopers &
                     Lybrand L.L.P. regarding review of the unaudited interim
                     financial statements

               27    Financial Data Schedule

          (b)  Reports on Form 8-K

               During the three-month period ended September 30, 1997, the
               Company filed no Current Reports on Form 8-K.




                                      18

<PAGE>



                                  SIGNATURE




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

                                   CENTRAL LOUISIANA ELECTRIC COMPANY, INC.


                                                 (Registrant)
  


                               By:          /s/  Thomas J. Howlin
                                    _____________________________________
                                                 Thomas J. Howlin
                                        Senior Vice President of Finance
                                           and Chief Financial Officer
                                          (Principal Financial Officer)



Date: November 14, 1997



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