Central Louisiana Electric Company (CLECO) Profile 15,16,22,23

CLECO serves approximately 213,000 electric customers in a 14,000 square-mile region of Louisiana which includes mostly small communities and rural areas. The company is headquartered in Pineville, and serves customers in 23 of Louisiana's 64 parishes. In terms of the 1993 revenues of all Louisiana-based companies from all industrial sectors, not just utilities, CLECO is Louisiana's tenth largest publicly-held company. The company's principal address and telephone number is as follows:

Central Louisiana Electric Company, Inc.
2030 Donahue Ferry Road
Pineville, Louisiana 71360-5226
Phone: 318/484-7400

CLECO's service territory basically consists of three areas, which are shown on the map in Figure 5. The south central area contains industrial loads that are primarily chemical and petroleum related. The west central and northern parts include major industrial loads consisting of timberrelated and agricultural interests. The paper industry purchases about half of all industrial sales and is the largest industry CLECO serves. The third area, north of New Orleans and Lake Pontchartrain, contains the highest density population the company serves and has seen the fastest growth in terms of new customers. Economic growth in the rest of CLECO's service area has been modest, mirroring Louisiana's listless economy of the past several years.

CLECO's 1993 electricity sales by customer sector as a percentage of total sales of 6,488 million KWH were 38. 1% residential, 17. 1% commercial, 30.9% industrial, and 13.9% other.

In 1993 the fuel sources for CLECO's share of power generated by plants operated by the company were 47.8% natural gas, 32.7% lignite, and 19.5% coal. Lignite is the company's least expensive fuel source. Peak demand in 1993 occurred August 19 and was 1,346 MW, up 2.9% from 1992, and generating resources totalled 1,706 MW, for a capacity reserve margin of 21.1%. No generating unit is under construction and no additional generating capacity or major transmission lines are expected to be needed until near the end of the decade.

The company's business strategy is to maintain its position of lowest-cost regional producer through efficient operation, working to bring new industry into its service area, and identifying and pursuing opportunities to provide service to localities in its service area that are not presently being served by the company. Construction outlays over the next several years are focused on continuing enhancements to transmission and distribution lines to better position the company to add new customers and provide transmission services that could be in demand as a result of the open access wheeling provisions of EPACT. The company is not presently seeking to enter unregulated non-utility business ventures involving power projects in other states or foreign countries.

Electric Generating Facilities
CLECO operates and either owns or has an interest in four Louisiana steam electric generating facilities with a generating capability totalling 1,694 MW (CLECO's share). According to primary fuel type, this capability is comprised of 71.5% natural gas, 19.2% lignite, and 9.3% coal. The company has an additional 20 MW of hydroelectric capacity available under a longterm contract with the Sabine River Authority of Louisiana, which owns 50% of the Toledo Bend Hydro Station on the Sabine River.12 CLECO is the sole owner of 1,212 INM of natural-gas fired capacity and also has a 30% interest in Rodemacher Unit 2, a 523 MW coal-fired generating unit, and a 50% interest in Dolet Hills Unit 1, a 650 MW Louisiana lignite-fired generating unit. The company's Dolet Hills plant is the only one in the state fueled by lignite. The 1992 generating capability of each CLECO generating station according to plant owner and primary fuel type is listed in Table 3. The location of each plant is plotted on the map in Figure 1.

CLECO's generating capability is 12.9% of the total capability of the IOUs Louisiana plants, 10.2% of the total capability of all of the state's utilities, and 8.8% of the total capability of all generating sources within the state.

In 1992 the 10,073 million KWH generated by plants operated by CLECO was 22.3% of the total generated by the IOUs Louisiana plants. This output was 18.3% of the total generated by the state's utilities and 13.6% of all power generated in Louisiana from all sources. The 1992 net generation of each CLECO generating station according to fuel type is listed in Table 1.

CLECO's existing solid-fueled units either burn low-sulfur coal or lignite or operate with pollution control equipment which enables them to be in compliance with limits set by the federal Clean Air Act Amendments of 1990 (CAAA)

Recent Developments
During 1993 the company signed a new five-year contract with the city of St. Martinville to supply all of its wholesale needs beginning in 1995. Also, a three-year contract was signed with the city of Alexandria to supply economy energy, capacity reserves, and control area services beginning in 1994. The St. Martinville contract will add 13 MW of additional load through the year 2000, and is subject to approval by the FERC. The city's present wholesale supplier and other parties are contesting the contract before the FERC.15

In 1993 a new 61-mile, 230,000-volt transmission line was completed. This was the largest project of its type in the company's history. 15

A demand side management program was tested during the summer of 1993 by directly controlling a sample of residential central air conditioning units. If developed fully, this program, along with refurbishing a retired 55 MW gas-fired generating unit, could further put off the need for new base-load generating capacity. 15

By the end of 1993 CLECO's organizational restructuring plan to reduce its workforce by 10% through enhanced retirement and voluntary severance programs was nearly 70% complete. As many as 150 positions are to be eliminated by 1995.15

Since February 22, 1994, the company has been trying to negotiate a purchase of the Teche Electric Cooperative, but the reaction from Teche management has been decidedly hostile. Coop members first indicated their sentiments on the issue at the April 12 annual meeting when they ejected to its eleven-member board four new directors who ran on a platform to support the CLECO offer. On June 30, 1994, some Teche members filed a petition to recall the remaining seven Board members the petitioners claim will not negotiate in good faith. Teche's service area is adjacent to and very similar to CLECO's., and the two systems are interconnected. CLECO already has 157 employees and nine offices in the area. CLECO's rates are about 22% lower than Teche's. If the transaction is approved, about 8,600 customers will be added to CLECO's customer base.24,25,26

A franchise agreement with the city of Crowley that was to expire in July 1994 was extended for 20 years. The contract affects about 6,000 customers, or about 2.8% of the company's customers. During negotiations the city had indicated that it may instead seek ownership of the company's electric system within the city limits.27

CLECO is presently seeking to provide wholesale power to the city of Minden, which is considering proposals from several potential suppliers.27

Since early May four wood products companies have announced plans to build new plants or expand existing facilities in the CLECO and LP&L service areas in central and northern Louisiana. The companies plan to spend $481 million, creating 720 permanent jobs and 1500 construction jobs.28 CLECO already supplies power to some of these companies and should benefit from these projects as they are completed during the next two years

History 4,29
The origins of CLECO can be traced to Bunkie, Louisiana, where, in 1914, a group of businessmen joined the town's ice manufacturers and built a 50 kilowatt (KW) generating unit. This small system served only Bunkie until 1926, when Wiley Corl organized the Louisiana Ice & Utilities Company. He then started to acquire small operations and consolidate them. The privately owned Bunkie system was purchased along with several small municipal plants in surrounding towns. However, Louisiana Ice & Utilities was a casualty of the Great Depression and was declared bankrupt in 1933.

In 1934 Floyd Woodcock reorganized the bankrupt company and formed the Louisiana Ice and Electric Company. In 1938 the company's first generating plant, Rea Station, was placed in operation at Bunkie. The plant consisted of three 1,000 KW gas-fired units, which satisfied total system demand at the time. The location of the Rea Station was chosen because plentiful natural gas reserves were available in the nearby Cheneyville and Eola fields. Upon completion, the plant was the largest electric generating station fueled by natural gas in the country.

In the early days of Louisiana Ice & Electric Company, very few of the nation's farmers had electricity, and in the midst of the Depression, had no money to pay for it even if it was available. So there was little incentive to extend electric lines into rural areas when only a small amount of revenue could be expected. Nevertheless, by 1935 the company recognized the need to serve the rural community and had extended lines to over 300 customers.

In 1939 the company's application to the REA for a $50,000 loan to expand service to rural areas was approved. This expansion resulted in an increase in rural customers to 5,342 by 1945, and by 1960 the number had grown to 35,000. The company was the only investor-owned electric utility to take advantage of the low interest money from the REA for rural expansion. In 1948 the company formed its first subsidiary, Louisiana Rural Electric Corporation, specifically to participate in the government program and provide electricity to those areas that could not be served economically by the company.

In 1945 the company changed its name to Central Louisiana Electric Company, Inc. Subsequently, the company's interests in ice plants and a dairy were sold, and its attention was directed toward expanding and improving utility services. CLECO's size more than doubled in 1951 when it merged with Gulf Public Service Co., Inc., a larger utility which operated electric properties contiguous to CLECO's service territory and several gas and water distribution systems. A portion of Gulf Public's holdings were located on the north shore of Lake Pontchartrain, so the merger established CLECO's service territory in that area. The opening of the Lake Pontchartrain Causeway in 1956 stimulated growth of CLECO's service area in St. Tammany and Washington Parishes. This area is now the fastest growing area of the state.

During the 1950s natural gas exploration and transmission subsidiaries were organized. These were South Louisiana Production Company in 1954 and Louisiana Intrastate Gas Corporation in 1955. In 1978 a holding company, Central Louisiana Energy Corporation, was organized and became the parent company of these highly successful subsidiaries and CLECO.

In 1981 management of the holding company felt that the interest of customers and shareholders would be better served if CLECO was spun off from its parent company. The spin-off separated the regulated and nonregulated businesses of the holding company and established CLECO once again as an independent investor-owned electric utility company. In the early 1980s, CLECO completed the divestiture of its water and retail gas distribution businesses and positioned itself solely as an electric utility. In subsequent years the company has grown steadily as an electric utility.

During the 1970s and 1980s CLECO retired several generating units and several others began commercial operation. In 1975 the gas-fired Rodemacher Unit I went into commercial operation and the coal-fired Rodemacher Unit 2 followed in 1982. In 1986 the lignite-fired Dolet Hills Unit 1 went into commercial operation. None of CLECO's generating units are nuclear thereby avoiding serious confrontations with regulatory agencies that have plagued other Louisiana utilities.

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