Cleco Corporation Affirms Confidence in Response to Rating Agencies' Actions.

Business Editors

PINEVILLE, La.--(BUSINESS WIRE)--July 26, 2002

Cleco Corp. (NYSE, PCX: CNL) today reacted to recent actions taken by rating agencies concerning its outstanding debt obligations. The company's announcement came following rating agencies' actions that were primarily driven by concerns over the stability of counterparties to tolling agreements involving Cleco's wholesale power plants.

Standard & Poor's placed Cleco on credit watch with negative implications. Being placed on credit watch is not necessarily a precursor to any additional steps by that rating agency. In addition, Moody's Investor Service lowered the rating on debt issued for Cleco Evangeline LLC, which owns the 775-megawatt St. Landry power plant.

"We are, of course, disappointed, but we believe, based on the limited actions they've taken, the agencies recognize the soundness of our overall business," Cleco President and CEO David Eppler said. "We enjoy the strength of a healthy regulated utility, and value exists in our wholesale generation portfolio.

"Obviously, we recognized potential problems with our counterparties early on, so we have been preparing strategies to deal with a variety of scenarios. We have been hoping for the best but planning for the worst.

"We've consistently proved our ability to quickly adapt to changing business environments, and we'll continue the conservative, financially disciplined philosophy we employ in running our business," Eppler said. "We use a balanced approach of maintaining the financial stability and cash flows of our regulated utility while optimizing the value of our unregulated generation assets."

Moody's announced it downgraded the Evangeline bonds, which remain investment grade, because of the credit downgrade of The Williams Companies Inc., which guarantees the tolling contract between Williams Energy Marketing & Trading Company and Cleco Evangeline.

"Evangeline is an attractive asset. Williams sells the majority of the plant's output to our regulated utility. It was one of the first combined-cycle plants built in this region, and its cost is approximately 40 percent lower than what it would take to build new combined-cycle capacity right now," Eppler said.

"We've also taken steps to strengthen our financial position and liquidity because we place such a high value on maintaining our investment-grade rating," Eppler said, referring to the issuance of 2 million shares of common stock and completing syndication of $325 million in bank credit facilities, both of which occurred in the second quarter.

Cleco Corporation is a regional energy services company headquartered in Pineville, La. It operates a nonregulated midstream energy business that has approximately 2,100 megawatts of generating capacity. Cleco also operates a regulated electric utility company that serves more than 250,000 customers across Louisiana. For more information about Cleco, visit www.cleco.com.

This news release contains forward-looking statements about future results and circumstances with respect to which there are many risks and uncertainties, including the weather and other natural phenomena, state and federal legislative and regulatory initiatives, the timing and extent of changes in commodity prices and interest rates, the operating performance of Cleco Power's and Midstream's facilities, and the other risks and uncertainties more fully described in the Company's latest Annual Report on Form 10-K and Quarterly Report on Form 10-Q. Actual results may differ materially from those indicated in such forward-looking statements.