Surcharges to fund repair costs for Cleco being cut in half

By Matthew Penix
St. Tammany News
Published on Friday, March 21, 2008 10:07 AM CDT

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Cleco Power LLC customers, who for more than two years have paid surcharges to repay $159 million the utility suffered in hurricane damages, will see those charges on their next bills slashed in half or more.

The average costumer was paying $4.98 cents per month to fund repair costs to Cleco's battered infrastructure as well as fund a reserve coffer in case another storm strikes. Now, Cleco's 256,000 customers will pay $2.32 a month on average, said Paul Zimmering, a partner in the Stone Pigman Law firm, an outside council for the Louisiana Public Service Commission who helped broker the deal.

"The bottom line is rate players are the ones saving money," he said.

The rates dropped this week after Cleco was awarded a AAA credit rating, the highest of its kind by the "big three" credit agencies, Fitch, Standard and Poor's and Moody's. The rating enabled the utility to buy and sell a "securitized bond" with a 4.8 percent interest rate that paid off its remaining hurricane repair debt, Zimmering said.

The bond, sold March 6, included $130 to repay hurricane repair debt and roughly $50 million in reserves to repair future storm damage, Zimmering said.

It was unclear Thursday how many St. Tammany electric customers are powered by Cleco.

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