The Louisiana Public Service Commission has approved a plan that allows Cleco Power LLC to recover $159 million in storm costs associated with restoration of service in the aftermath of hurricanes Katrina and Rita.

The plan authorizes the issuance of securitized bonds to finance restoration costs from the 2005 hurricanes. The plan also authorizes the creation of a $50 million storm reserve to economically fund repair costs from future storms. The collection of a special storm recovery charge from Cleco Power's customers will securitize up to $190 million in bonds. Because of the financing structure, the current interim storm surcharge being paid by customers will be reduced by approximately $3 per average monthly residential bill.

In February 2006, the LPSC approved an interim storm recovery plan that permitted Cleco Power to collect an interim storm surcharge to offset storm costs associated with Katrina and Rita, which gave the company time to pursue federal funds and create the legal structure necessary for the securitized financing. Cleco Power has collected more than $20 million of storm surcharges from customers through the interim plan.

"This has been a two-year process to create this financing framework, but our efforts have enabled us to keep our commitment to lower storm recovery costs for our customers," said Michael Madison, Cleco president and CEO. "Absent federal assistance, this is the best option for our customers."