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McCloskey Annual Petcoke Conference Houston, Texas

C leco Corporation Fuel Procurement Electric Utility Perspective. McCloskey Annual Petcoke Conference Houston, Texas. Bill Fontenot Vice President Regulated Generation Development Cleco Power, LLC. Cleco Headquarters. Cleco Corporation (CNL). Cleco Corp.

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McCloskey Annual Petcoke Conference Houston, Texas

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  1. Cleco CorporationFuel ProcurementElectric Utility Perspective McCloskey Annual Petcoke Conference Houston, Texas Bill Fontenot Vice President Regulated Generation Development Cleco Power, LLC

  2. Cleco Headquarters Cleco Corporation (CNL) Cleco Corp. Two primary subsidiaries Balance sheet: $2.7 billion Market cap: $1.6 billion Integrated, regulated electric utility serving 270,000 customers in Louisiana for over 70 years Wholesale generation subsidiary with 1,355 MW of capacity Cleco Power Cleco Midstream

  3. Overview of Rodemacher Unit 3 • 600-MW, solid-fuel power generator • Incorporates Circulating Fluidized-Bed (CFB) Technology • Foster Wheeler design • State-of-the-art pollution controls • Expected commercial operation: • mid-to-late 2009

  4. Construction Facts • Over 3 million man-hours worked • Construction is 65% complete • Design engineering effectively complete • Remain on budget and on schedule

  5. Why Rodemacher Unit 3? Purchased Power 33% Coal & Lignite 24% Purchased Power 11% Solid Fuel 49% Natural Gas & Oil 43% Natural Gas & Oil 40%

  6. CFB Fuel Flexibility • CFB design allows for fuel consumption alternatives • Fuel capability • Coal (Illinois, PRB, South American) • Lignite • Petcoke • Select re-newables • Primary fuel specification • Btu content Flexible • Sulfur content: Up to 7% • HGI: 30 to 100 • Sulfur removal primarily through limestone consumption

  7. Electric Utility Generation Objectives • Low cost reliable power for its customers 35% to 45% of overall costs

  8. Fuel Strategy - Supply • Petcoke - Fuel choice for Rodemacher Unit 3 • Plentiful production in nearby Gulf Coast region • Historically priced at a discount to coal • 3-month storage capacity on site

  9. Costs Commodity Price Delivery & Handling Treatment Flexibility Reliability Origin or Source Term Mode of transportation Alternative modes Fuel Procurement Drivers

  10. Pricing • Pricing Portfolio Approach • Indexed pricing • Fixed • Collared • Properties • Costs driven by treatment or operational impact (i.e. limestone, sand, fines) • Overall cost per mmbtu is key

  11. Cost Per Mmbtu

  12. Terms and Conditions • Contract tenure of 1 to 5 years • Option to cancel or suspend delivery for economic reasons • Appropriate risk of loss and separation of liability

  13. Fuel Strategy - Transportation • Reliable means of river/conveyor transportation to site • Use of Louisiana heartland waterways (Mississippi, Red River) • 5-to-7 day expected round trip from Gulf Coast to site • Loading/unloading facility to be constructed off Red River • 1.5 mile tube conveyor from loading/unloading facility to site

  14. 1.5 Mile Conveyor to Plant

  15. Delivery & Handling • Costs typically driven by source location • Will accept product from: Production source -or- Gulf Coast, Mississippi River fleet • Will provide or use producer transportation assets • Availability of alternative delivery mode Reliability is major concern

  16. Status • Savage Services will supply terminaling, transportation and logistics • Late stage petcoke supply negotiations with multiple suppliers • Expect 3-to-5 year supply in place by end of 3rd qtr 2008 • Continue to evaluate solid fuel pricing

  17. Maintain Procurement Strategy • Sustain savings to our customers • Provide flexibility of solid fuel choice • Reduce fuel dependence on natural gas • Reliable delivery of power to Cleco customers

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