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CLECO CORPORATION
(Exact name of registrant as specified in its charter)

CLECO POWER LLC
(Exact name of registrant as specified in its charter)

     Cleco Power LLC meets the conditions set forth in General Instruction I (1)(A) and (B) of Form 10-K and is therefore filing this Form 10-K with the reduced disclosure format.

     Indicate by check mark whether each of the registrants (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),  and (2) have been subject to such filing requirements for the past 90 days.  Yes  X   No     .

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of each of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.[  ]

     As of March 1, 2002, the aggregate value of the Cleco Corporation voting stock held by non-affiliates was $956,475,235.  Cleco Corporation's Cumulative Preferred Stock is not listed on any national securities exchange, nor are prices for the Cumulative Preferred Stock quoted on any national automated quotation system; therefore, its market value is not readily determinable and is not included in the foregoing amount.

     As of March 1, 2002, there were 44,960,381 shares outstanding of Cleco Corporation's Common Stock, par value $1.00 per share.  As of March 1, 2002 all of Cleco Power's Common Equity Units were owned by Cleco Corporation.

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          References in this filing to "the Company" or "Cleco" mean Cleco Corporation and its subsidiaries, including Cleco Power LLC, and references to "Cleco Power" mean Cleco Power LLC, unless the context clearly indicates otherwise.  Additional abbreviations or acronyms used in this filing are defined below:

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          This Annual Report on Form 10-K (this Report) made by Cleco and Cleco Power includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  All statements other than statements of historical fact included in this Report contain forward-looking statements.  Included or incorporated by reference elsewhere in this Report are forward-looking statements regarding available power, fuel supply, sales growth, capital expenditures, Cleco Power's 1996 LPSC settlement, the effect of certain recent FERC regulations, development of electric generating facilities, future legislative and regulatory changes affecting electric utilities, future earnings, revenue recognition from the Evangeline Tolling Agreement, the effects of the outcome of litigation and other legal proceedings, capital expenditures, sources of funds for capital expenditures, the timing of completion of the APP project and the PEP project, the ultimate equity investment in APP and PEP, future legislative and regulatory changes, the effect of certain recent FERC regulations, environmental compliance costs, development of electric generating facilities, future minimum operating lease rental payments and other matters.  Although Cleco and its subsidiaries believe the expectations reflected in such forward-looking statements are reasonable, such forward-looking statements are based on numerous assumptions (some of which may prove to be incorrect) and are subject to risks and uncertainties which could cause the actual results to differ materially from those indicated in such forward-looking statements.  Forward-looking statements have been and will be made in written documents and oral presentations of Cleco, Cleco Power and Cleco's other subsidiaries.  Such statements are based on management's beliefs, as well as assumptions made by and information currently available to management.  When used in Cleco's, Cleco Power's or Cleco's other subsidiaries' documents or oral presentations, the words "anticipate," "estimate," "expect," "objective," "projection," "forecast," "goal" and similar expressions are intended to identify forward-looking statements. &n bsp;In addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements, factors that could cause Cleco's, Cleco Power's or Cleco's other subsidiaries' actual results to differ materially from those contemplated in any forward-looking statements include, among others, the following:

          Cleco and Cleco Power undertake no obligation to update or revise any forward-looking statements, whether as a result of changes in actual results, changes in assumptions or other factors affecting such statements.

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          Cleco was incorporated on October 30, 1998 under the laws of the State of Louisiana.  In July 1999, Utility Group reorganized into a holding company structure.  This reorganization resulted in Cleco becoming a holding company.  Cleco holds investments in several subsidiaries, including Cleco Power (successor to Utility Group) and Midstream, which comprise separate operating business segments, and UTS formerly known as Utilitech, a discontinued business segment.

          Effective December 31, 2000, Utility Group merged into Cleco Power, another wholly-owned subsidiary of Cleco.  Immediately prior to the merger, Cleco Power had only nominal assets or liabilities.  Pursuant to the merger, Cleco Power acquired all of the assets and assumed all of the liabilities and obligations of Utility Group.

          Cleco Power's predecessor was incorporated on January 2, 1935 under the laws of the State of Louisiana.  Cleco Power was organized on December 12, 2000 and contains the LPSC jurisdictional generation, transmission and distribution electric utility operations serving Utility Group's traditional retail and wholesale customers.  Cleco Power succeeded to Utility Group's assets and liabilities pursuant to a merger of Utility Group into Cleco Power in December 2000.  Cleco Power serves approximately 250,000 customers in 63 communities and rural areas in a 14,000-square-mile region in the State of Louisiana.  Cleco Power's operations are described below in the consolidated description of Cleco's business segments.

          Midstream, organized on September 4, 1998 under the laws of the State of Louisiana, owns and operates wholesale generation stations, invests in joint ventures that own and operate wholesale generation stations, owns and operates natural gas pipelines, and engages in energy marketing activities.  Midstream operates primarily in Louisiana and Texas.

          UTS is a discontinued business segment.  UTS was a utility line construction business originally organized on October 30, 1997.  In December 2000, Cleco decided to sell substantially all of the assets of UTS.  Revenues and expenses associated with UTS are netted and shown on our Consolidated Statements of Income as loss from discontinued operations.  For additional information on the sale of the assets, see the Notes to the Cleco Consolidated Financial Statements, Note 18 - "Discontinued Operations" on page 59 of the 2001 Annual Report to Shareholders, which is filed as Exhibit 13 to this Report and incorporated herein by reference.

          At December 31, 2001, Cleco employed 1,392 persons.  Cleco's mailing address is

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P.O. Box 5000, Pineville, Louisiana 71361-5000, and its telephone number is (318) 484-7400.  Cleco's homepage on the Internet's World Wide Web is located at http://www.cleco.com.  Cleco, subject to certain limited exceptions, is exempt from regulation as a public utility holding company pursuant to Section 3(a)(1) of the 1935 Act.

          At December 31, 2001, Cleco Power employed 1,004 persons.  Cleco Power's mailing address is P.O. Box 5000, Pineville, Louisiana, 71361-5000, and its telephone number is (318) 484-7400.

          On March 22, 2002, Cleco entered into an Equity Purchase Agreement with Mirant to purchase Mirant's 50 percent ownership interest in PEP.  Cleco will pay Mirant cash of approximately $48 million and assume Mirant's $19.8 million future equity commitment to PEP.  The transaction is anticipated to close in the second quarter of 2002.  After closing, Cleco will own 100 percent of PEP.  Cleco currently expects to fund the purchase and future equity contribution by issuing either short- or medium-term debt and by issuing approximately one million shares of common stock.  For more information about PEP, see "- Operations - Midstream" below.

          Currently, Cleco accounts for the investment in PEP using the equity method of accounting.  Under the equity method of accounting, Cleco's $3.4 million investment in PEP is reported on the consolidated balance sheet in one line item "Equity investment in investee" and Cleco's share of earnings from PEP are reported on the consolidated income statement under "Other income (expense), net".  After the closing date, Cleco will discontinue the equity method of accounting and consolidate PEP.  Under the consolidation method of accounting, all of PEP's approximately $286.8 million in assets and liabilities will be reported on the consolidated balance sheet on the appropriate lines and PEP's revenues and expenses will be reported on the respective lines of the consolidated income statement.

          As an electric utility, Cleco Power is affected, to varying degrees, by a number of factors affecting the electric utility industry in general.  These factors include, among others, increasingly competitive business conditions, the cost of compliance with environmental regulations and changes in the federal and state regulation of the generation, transmission and sale of electricity.  For a discussion of various regulatory changes and competitive forces affecting Cleco Power and other electric utilities, see "Regulatory Matters, Industry Developments and Franchises - Industry Developments" below.

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Power Generation

          Cleco Power operates and either owns or has an ownership interest in three steam electric generating stations, and a gas turbine.  At December 31, 2001, Cleco Power's aggregate electric generating capacity was 1,366,900 kW.  The following table sets forth certain information with respect to Cleco Power's generating facilities:

          Changes in fuel and purchased power expenses reflect fluctuations in generation fuel mix, fuel costs, availability of economic purchased power and deferral of expenses for recovery from customers through fuel adjustment clauses in subsequent months.

          The following table sets forth, for the periods indicated, the percentages of power generated from various fuels at Cleco Power's electric generating plants, the cost of fuel used per kWh attributable to each such fuel and the weighted average fuel cost per kWh.

Power Purchases

          If transmission capacity is available, Cleco Power purchases electric energy from neighboring utilities and energy marketing companies when the price of the energy purchased is less than Cleco Power's cost of generating such energy from its own facilities or when it needs power to supplement its own electric generation.  Cleco Power has a long-term contract under which it purchases 20,000 kW of firm energy from the Sabine River Authority which operates a hydroelectric generating plant.  In addition, Cleco Power has three contracts for firm electric

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capacity and energy with Williams Energy and Dynegy for 705 MW of capacity in 2002 and 2003, increasing to 760 MW of capacity in 2004.  These contracts were approved by the LPSC in March 2000 and expire in December 2004.

          The following table sets forth the amounts of power purchased by Cleco Power on the wholesale market for the years indicated.

          In February 1999, the LPSC approved the transfer of the existing CPS assets out of our LPSC-regulated rate base into Evangeline, an indirect wholly-owned subsidiary of Cleco.  The actual transfer occurred in November 1999.  In return for the approval of the asset transfer, we agreed to extend the terms of our 1996 rate settlement with the LPSC for an additional three years to 2004.  See "- Regulatory Matters, Industry Developments and Franchises - Rates" for more information about the LPSC settlement.  The agreement also contains specific provisions designed to hold Cleco Power's ratepayers harmless from negative impacts that might result from the removal of the CPS generating assets from its rate base.  In return, Cleco Power authorized the transfer of CPS generating and transmission assets to Evangeline at their net book value of approximately $9.8 million.  This result ed in a reduction in Cleco Power's generating capability of 334,000 kW.

          During 2001, 40% of Cleco Power's energy requirements were met with purchased power, up from 34% in 2000.  The primary factor causing the increase in purchased power in 2001 as compared to 2000 was the price of natural gas.  On average in 2001, the price of natural gas, on a cost basis of per MWh of generation, was $51.70 per MWh, while the price of power was $30.29 per MWh.  For information with respect to Cleco Power's ability to currently pass through changes in costs of fuel to its customers, see "Regulatory Matters, Industry Developments and Franchises - Rates" below.

          In future years, Cleco Power's generating facilities may not supply enough electric power to meet its customers' growing demand (native load demand) and Cleco Power may need to purchase additional generating capacity and/or purchase power to satisfy these needs.  Management expects to meet substantially all of Cleco Power's native load demand through 2004 with Cleco Power's own generation resources and the power purchase agreements discussed above.  Because of Cleco Power's location on the transmission grid, it relies on one main supplier of electric transmission and is sometimes constrained as to the amount of purchased power it can bring into its system.  The three power supply contracts with Williams Energy and Dynegy discussed above are not expected to be affected by such transmission constraints.

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Natural Gas Supply

          During 2001, Cleco Power purchased a total of 27,818 MMBtu of natural gas for the generation of electricity.  The annual and average per-day quantities of gas purchased by Cleco Power from each supplier are shown in the table below.

          CLE Intrastate, a wholly-owned subsidiary of Midstream, owns a series of natural gas interconnections with Trunkline Gas Company, Columbia Gulf Transmission Co. and ANR Pipeline Company.  The pipeline interconnections allow Cleco Power to access various additional natural gas supply markets, which helps to maintain the competitiveness of Cleco Power's generating units.

          Natural gas was available without interruption throughout 2001.  Cleco Power currently meets, and expects to continue to meet, its natural gas requirements with purchases on the spot market through daily, monthly and seasonal contracts with various natural gas suppliers.  However, future supplies to Cleco Power remain vulnerable to disruptions due to weather events and transportation delays.  The potential for disruptions to Cleco Power has been decreased by the addition of the CLE Intrastate interconnections.  Nevertheless, large boiler fuel users of natural gas, including electric utilities, generally have low priority among gas users in the event pipeline suppliers are forced to curtail deliveries due to inadequate supplies.  As a result, supplies of natural gas may become unavailable from time to time, or prices may increase rapidly in response to temporary supply interruptions .  Such events, though rare, may require Cleco Power to shift its gas-fired generation to alternative fuel sources, such as fuel oil, to the extent it has the capability to burn those alternative fuels.  Currently, Cleco Power anticipates that its alternative fuel capability, combined with its solid-fuel generation resources, are adequate to meet its fuel needs during any temporary interruption of natural gas supplies.

Coal and Lignite Supply

          Cleco Power uses coal fuel for generation at Rodemacher Unit 2.  The majority of the coal for Rodemacher Unit 2 is purchased from mines in Wyoming under a long-term contract expiring in June 2002 with Jacobs Ranch Coal Company.  The contract has been modified under price

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reopener procedures initiated in July 1997.  The pricing structure under the modified contract has been defined through June 2002.  The pricing structure is a set price per year based on Btu delivered.  After purchasing a given annual quantity of base coal (approximately 500,000 tons in 2001), Cleco Power has the right to purchase coal from third parties in the spot market through competitive bidding.  Provisions for pricing and terms are in the process of renegotiation under a contract reopener provision which expires on June 30, 2002.  If negotiations are not complete by the expiration date, the contract terminates unless the parties have expressly agreed in writing to extend the negotiating period.  Management currently expects to complete negotiations before the expiration date.  If renegotiations are not successful, Cleco Power has the right under the contract to continue receiving coal from Jacobs Ranch Coal Compan y for a period of six months at the agreed upon price for 2002.  During this period, Cleco Power can negotiate terms with other suppliers.

          Cleco Power uses lignite fuel for generation at Dolet Hills Unit 1.  Substantially all of the lignite used to fuel Dolet Hills Unit 1 is obtained under two long-term agreements.  Cleco Power and SWEPCO, each a 50% owner of Dolet Hills Unit 1, have entered into agreements pursuant to which each acquired an undivided 50% interest in the other's leased and owned lignite reserves in northwestern Louisiana.  In May 2001, Cleco Power and SWEPCO entered into a long-term agreement with automatic annual renewals through 2011 with DHLC for the mining and delivery of such lignite reserves.  The agreement replaces a previous LMA that was terminated under a settlement agreement in connection with certain litigation relating to the previous LMA.  These reserves are expected to provide a substantial portion of the fuel requirements for the projected operating life of Dolet Hills Unit 1. &nbs p;For more information about the litigation relating to the previous LMA and the agreement with DHLC, see Notes to Cleco Power's Financial Statements - Note 11 - Legal Proceeding: Fuel Supply - Lignite in Item 8 of Cleco Power's Report.

          Additionally, Cleco Power and SWEPCO have entered into a long-term agreement expiring in 2011 with Red River Mining Co., a joint venture of the North American Coal Corporation and Phillips Coal Company, which provides for base contract purchases and spot purchases of lignite.  Cleco Power's minimum annual purchase requirement is 550,000 tons.  The base lignite price under the contract is a base price per MMBtu, subject to escalation, plus certain "pass-through" costs, while the spot lignite price is determined through competitive bidding.

          The continuous supply of coal and lignite from the mining sources described above may be subject to interruption due to adverse weather conditions or other factors which may disrupt mining operations or transportation.  At December 31, 2001, Cleco Power's coal inventory at Rodemacher Unit 2 was approximately 210,000 tons (about a 100-day supply), and Cleco Power's lignite inventory at Dolet Hills Unit 1 was approximately 116,000 tons (about a 20-day supply).

          Cleco Power stores fuel oil as an alternative fuel source.  Rodemacher has storage capacity for an approximate 75-day supply, and other generating stations have storage capacity totaling

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about a 20-day supply.  However, in accordance with Cleco Power's current fuel oil inventory practices, at December 31, 2001, Cleco Power had between 6 to 12 days supply of fuel oil stored at its generating stations.  During 2001, approximately 7.8 million gallons of fuel oil were burned.  During January 2001, fuel oil was burned because the cost of using fuel oil to generate electricity was lower than the cost of using natural gas.

Sales

          Cleco Power is a public utility engaged principally in the generation, transmission, distribution and sale of electricity within Louisiana.  For further information regarding Cleco Power's generating stations and its transmission and distribution facilities, see "- Power Generation" above and "Properties - Cleco Power" in Item 2 of this Report.

          Cleco Power's 2001 system peak demand occurred in July and was 1,751,000 kW, while 2000 system peak demand occurred in August and was 1,839,000 kW.  Sales and peak demand are affected and influenced by weather and are generally highest during the summer air-conditioning and winter heating seasons.  In 2001, Cleco Power experienced near normal summer weather and below normal winter weather.  For information concerning the financial effects of seasonal demand on Cleco Power's quarterly operating results, see Notes to Cleco Power's Financial Statements - Note 14 - Miscellaneous Financial Information (Unaudited) in Item 8 of this Report.

          Capacity reserve margin is the net capacity resources (either owned capacity or purchased capacity) less native load demand divided by net capacity resources.  Cleco Power's capacity reserve margin is established by the SPP at 12%.  A member of the SPP meets the capacity reserve margin goal by submitting the forecasted native load demand and the forecasted mix of net capacity resources to meet the forecasted native load demand.  In 2001, Cleco Power was deemed to have met the reserve requirements established by the SPP.  If capacity reserve requirements are not met, the SPP can require higher capacity reserve requirements in subsequent years.  Cleco Power's actual capacity reserve margin for 2001 was 16.3%, while in 2000 it was 7.7%.  The decrease in peak demand in 2001 caused the reserve margin to increase.  Cleco Power expects the peak demand on the system to grow at a compound annual rate of approximately 2% to 3% over the next five years.  To meet the capacity reserve margin through 2004, Cleco Power has purchased 705 MW of firm capacity and transmission service which began on June 1, 2000, increasing to 760 MW in 2004.  Cleco Power believes it can meet its anticipated growth in customer demand by purchasing additional needed capacity on the wholesale market.  Future capacity needs may be met by continuing to purchase power on the wholesale market.

Energy Marketing Operations

          For information concerning energy marketing operations within Cleco Power, see "Management's Discussion and Analysis of Financial Condition and Results of Operations, - Results of Operations - Cleco Power" in Item 7 of this Report and "Quantitative and Qualitative Disclosures About Market Risk - Cleco Power" in Item 7A of this Report.

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MIDSTREAM

          Midstream wholly-owns six active limited liability companies which operate mainly in Louisiana and Texas:

          The following table sets forth certain information with respect to Midstream's operating generating facilities.

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          The following table sets forth certain information with respect to Midstream's generating facilities currently under construction through joint ventures.

          Midstream competes against regional and national companies that develop wholesale power stations.  CMT competes against regional energy marketing companies.  Cleco Energy competes against regional gas transportation and gas marketing companies.

          CMT's primary customers are energy producers, utilities, large commercial and industrial firms, wholesale power and gas marketers, and municipalities that buy or resell power to end-users.  Revenues are primarily based upon the demand for energy products compared with supply.  Weather and customer mix within the region are the primary drivers of demand for CMT's energy products.  The number of power plants that are operational, the availability and price of natural gas, and the available transmission capacity drive the supply of energy products.

          Evangeline has one customer, Williams Energy, which is the counterparty to the Evangeline Tolling Agreement.  Tolling revenues are primarily affected by the availability of the Evangeline power plant and other operational characteristics of the plant.  The Evangeline Tolling Agreement gives Williams Energy the right to own, dispatch and market all of the electric generation capacity of the Evangeline facility until July 2020.  Williams Energy is responsible for providing its own natural gas to the facility and pays Evangeline a fee for operating and maintaining the facility.

          Cleco Energy's revenues are primarily driven by the demand for natural gas, which in turn is driven by the weather and the number of power stations, industrial plants and commercial and residential customers who use natural gas within its region.

          APP has a tolling agreement with Aquila Energy for 580-MW of the 1,160-MW capacity starting on July 1, 2002 and continuing for 20 years.  Under the tolling agreement, Aquila Energy will supply the natural gas required to generate 580-MW and will own the electricity.  APP also has a tolling agreement with Calpine Energy Services for the remaining 580-MW of capacity starting on July 1, 2002 and continuing for 20 years.  Under the tolling agreement, Calpine Energy Services will supply the natural gas required to generate 580-MW and will own the electricity.  Both will pay APP a fee for operating and maintaining the facility.

          PEP has a tolling agreement with Mirant for 725-MW of capacity starting on July 1, 2002 and continuing for 20 years.  Under the tolling agreement, Mirant will supply the natural gas required to generate 725-MW and will own the electricity.  Mirant will pay PEP a fee for operating and maintaining the facility.

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          At December 31, 2001, Midstream and its subsidiaries employed 160 people: 22 within CMT, 39 within Cleco Energy, 79 within GEN and 20 at Midstream.

          For additional information concerning Midstream's operations, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Midstream - Results of Operations - Continuing Operations," "- Financial Condition - Cash Generation and Cash Requirements - Midstream Construction and Investment in Subsidiaries," and the Notes to Cleco's Consolidated Financial Statements - Note 11 - Disclosures about Segments on pages 21, 23-24, 27, and 54-55, respectively, of the 2001 Annual Report to Shareholders, which is filed as Exhibit 13 to this Report and incorporated herein by reference.

          In December 2000 management decided to sell substantially all of the assets of UTS and discontinue its operations after the sale.  On March 31, 2001, management signed an asset purchase agreement to sell UTS to Quanta for approximately $3.1 million in cash and assumption of an operating lease for equipment of approximately $11.6 million.  For more information about the discontinued operations, see the Notes to Cleco's Consolidated Financial Statements - Note 18 - Discontinued Operations on page 59 of the 2001 Annual Report to Shareholders, which is filed as Exhibit 13 to this Report and incorporated herein by reference.

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Rates

          Retail electric operations of Cleco Power are subject to the jurisdiction of the LPSC with respect to rates, standards of service, accounting and other matters.  Cleco Power is also subject to the jurisdiction of the FERC with respect to certain aspects of its electric business, including rates for wholesale service, interconnections with other utilities, and the transmission of power.  Periodically, Cleco Power has sought and received increases in base rates from both the LPSC and the FERC to cover increases in operating costs and costs associated with additions to generation, transmission and distribution facilities.

          Cleco Power's electric rates include fuel and purchased power cost adjustment clauses which enable it to adjust rates for monthly fluctuations in the cost of fuel and short-term purchased power.  Pretax income from certain off-system sales to other utilities is passed on to customers through a reduction in fuel cost adjustment billing factors.  Fuel costs and fuel adjustment billing factors are approved by the LPSC and the FERC.  These cost adjustments are based on costs from earlier periods which can result in over- or under-recovery for the period in which the adjustment is made.  Any over- or under-recovery is corrected by an adjustment in later periods.  As of December 31, 2001, the net accumulated asset for under-recovery on sales subject to the LPSC's jurisdiction was approximately $8.0 million.

          The LPSC elected in 1993 to review the earnings of all electric, gas, water and telecommunications utilities that it regulates to determine whether the returns on equity of these companies were higher than returns that might be awarded in the economic environment at that time.  In 1996, the LPSC approved a settlement of Cleco Power's earnings review, which lowered Cleco Power's electricity rates.  The terms of the settlement were to be effective for a five-year period.  In February 1999, the period was extended three years until 2004.  For information regarding this settlement, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition - Retail Rates of Cleco Power" on page 30 of the 2001 Annual Report to Shareholders, which is filed as Exhibit 13 to this Report and incorporated herein by reference.

Franchises

          Cleco Power operates under nonexclusive franchise rights granted by governmental units, such as municipalities and parishes (counties), and enforced by state regulation.  These franchises are for fixed terms, which vary from 10 years to 50 years.  In the past, Cleco Power has been substantially successful in the timely renewal of franchises as each reaches the end of its term and expires.

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          A number of parishes have attempted in recent years to impose franchise fees on retail revenues earned within the unincorporated areas Cleco Power serves.  If the parishes are ultimately successful, taxes other than income taxes could increase substantially in future years.

          For information on certain franchises affecting Cleco Power, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition - Franchises" on page 32 of this Report and incorporated herein by reference.

Industry Developments

          Technological improvements in recent years have somewhat lessened the historical barriers to entry in the electric utility industry and have set in motion statutory and regulatory changes aimed at increased competition in the industry.  Federal and state legislation and new regulatory initiatives designed to restructure electricity markets will likely produce even greater competition at both wholesale and retail levels in the future.  The LPSC is investigating whether retail choice is in the best interest of Louisiana electric utility customers.  During 2000, the LPSC staff developed a transition to competition plan that was presented to the LPSC.  In November 2001, the LPSC directed the staff to organize a series of meetings to more fully explore the unresolved issues in the plan.  The staff was also directed to report on the success or failure of the commencement of retail el ectric choice in surrounding states.

          At the federal level, several bills, some with conflicting provisions, have been introduced and were actively debated in the last few years to promote a more competitive environment in the electric utility industry, although none were passed.  Conversely, the troubled electric supply situation experienced in California within the past few years has led many participants in the industry to reexamine the restructuring process.  While a competitive environment continues to be espoused in many markets, several states have modified or abandoned their restructuring efforts or have asked for delays in implementing already passed rules or legislation.  Management expects the debate relating to customer choice and other related issues to continue in legislative and regulatory bodies in 2002.  At this time, Cleco cannot predict whether any legislation or regulation will be enacted or adopted during 20 02 and, if enacted, what form such legislation or regulation would take.

Wholesale Electric Competition

          In 1999, the FERC issued Order No. 2000, which, together with prior orders issued by the FERC, defines the operation of utilities' transmission systems.  This order establishes a general framework for all transmission-owning entities in the nation to voluntarily place their transmission facilities under the control of an appropriate RTO.  Although participation is voluntary, the FERC has made it clear that any jurisdictional entity not participating in an RTO will be subject to further regulatory directives.  On July 11, 2001, the FERC issued orders stating its intention to form four regional RTOs covering the Northeast, Southeast, Midwest and West.  Since this date the FERC has relaxed its mandate for the four RTOs, but is still insisting upon the large regional RTO model.  Many transmission owning utilities and system operators

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have attempted to comply with the FERC directives by organizing RTOs.  In November 2001, Entergy Corporation and Southern Companies announced a combined effort to form a Southeastern RTO, the SeTrans.  At the same time, SPP and the Midwest Independent System Operator announced their combined effort to design a Midwestern RTO.  For Cleco Power, this provides an opportunity to participate in both markets due to its proximity to both proposed RTOs.  Cleco Power is continuing to participate in the RTO development process that is ongoing.  Cleco Power cannot anticipate the final form and configuration that this organizational process will yield nor which specific RTO Cleco Power will join.  Additionally, various parties, including several state commissions, utilities, and other industry participants, are now contesting FERC's jurisdiction in this matter.  It is uncertain how or when this debate will be resolved.

          In September 2001, the LPSC issued Order No. U-25965 requiring Cleco Power and the other Louisiana transmission owning entities to show cause why they should not be enjoined from transferring ownership or control of their bulk transmission assets, paid for by jurisdictional ratepayers, to another entity, such as an RTO.  This order also requires that Cleco Power and the other Louisiana transmission owning entities show cause why the LPSC should not declare that the pricing and cost transfers required by the recommendation of the Administrative Law Judge in FERC Docket No. RTO1-100-000 conflict with the public interest.  The LPSC order does not limit Cleco Power's ability to participate in RTO development, and management does not believe that the order will materially adversely affect Cleco Power's financial condition, liquidity or results of operations.

          The transfer of control of Cleco Power's transmission facilities to an RTO has the potential to materially affect Cleco's financial condition and results of operations.  Additionally, Cleco Power cannot predict the possible impact to results of operations that may arise from the adoption of new transmission rates resulting from Cleco Power's possible membership in an RTO.

          Wholesale energy markets, including the market for wholesale electric power, are becoming even more competitive than in the past, as the number of participants in these markets increases with the enactment of the Energy Policy Act and the regulatory activities of the FERC.

          For a discussion of regulatory matters relating to Cleco's electric utility operations, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition - Regulatory Matters" on pages 31-32 of the 2001 Annual Report to Shareholders, which is filed as Exhibit 13 to this Report and incorporated herein by reference.

Retail Electric Competition

          Federal and state regulators and legislators are studying potential effects of restructuring the vertically integrated utility systems and providing retail customers a choice of supplier.  At this time it is not possible to predict when, if or to what extent, retail customers in Louisiana will be able to choose their electric suppliers.  No federal legislation was passed in the most recent legislative session, although several bills were proposed that addressed both restructuring of the

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industry and transmission reliability issues.  Cleco cannot predict what future legislation may be proposed and/or passed and what effect it may have upon Cleco's results of operations or financial condition.

          The LPSC has determined retail choice is not currently in the best interest of Louisiana electric utility customers.  Cleco Power and a number of parties, including the other Louisiana electric utilities, certain power marketing companies, and various associations representing industry and consumers, have participated in electric industry restructuring proceedings before the LPSC since 1997.  In November of 2001, the LPSC directed the staff to organize a series of collaboratives to more fully explore the unresolved issues in the retail choice plan presented earlier in the year.  For more information on the LPSC's assessment of retail electric competition for Louisiana electric utility customers, see "Industry Developments" above in this Report.

          Currently, the LPSC does not provide exclusive service territories for electric utilities under its jurisdiction.  Instead, retail service is obtained through a long-term nonexclusive franchise.  The LPSC uses a "300 foot rule" for determining the supplier for new customers.  The application of this rule has led to competition with neighboring utilities for retail customers at the borders of Cleco Power's service areas.  Cleco Power also competes in its service area with suppliers of alternative forms of energy, some of which may be less costly than electricity for certain applications.  Cleco Power could experience some competition for electric sales to industrial customers in the form of cogeneration or from independent power producers.

Legislative and Regulatory Changes and Matters

          Various federal and state legislative and regulatory bodies are considering a number of issues in addition to those discussed above that will shape the future of the electric utility industry.  Such issues include, among others:

          Cleco is unable, at this time, to predict the outcome of such issues or their effect on Cleco's financial position, results of operations or cash flows.

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          For information on certain regulatory matters and regulatory accounting affecting Cleco, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition - Regulatory Matters" on pages 31-32 of the 2001 Annual Report to Shareholders, which is filed as Exhibit 13 to this Report and incorporated herein by reference.

ENVIRONMENTAL MATTERS

Environmental Quality

          Cleco is subject to numerous laws and regulations administered by federal, state and local authorities to protect the environment.  These statutory and regulatory provisions impose various substantive requirements, the violation of which may result in substantial fines and penalties.  Environmental requirements continue to increase as a result of new legislation, administrative actions and judicial interpretations.  Therefore, the precise future effects of existing and potential requirements are difficult to determine.  During 2001, Cleco's capital expenditures related to environmental compliance were about $0.5 million, due largely to improvements to air pollution abatement equipment at Dolet Hills.  Expenditures related to environmental compliance are estimated to total approximately $0.6 million in 2002.

Air Quality

          The State of Louisiana regulates emissions from each of Cleco's generating units through regulations issued by the AQD of the LDEQ.  In addition, the AQD implements certain programs initially established by the federal EPA.  The AQD establishes standards of performance or requires permits for certain generating units in Louisiana.  All of Cleco's generating units are subject to these requirements.

          The federal Clean Air Act established a regulatory program to address the effects of acid rain and imposed restrictions on SO2 emissions from certain generating units.  The Act essentially requires that certain generation stations, such as those owned by Cleco Power, Evangeline, APP, and PEP, must hold a regulatory "allowance" for each ton of SO2 emitted beginning in the year 2000.  The EPA is required to allocate a set number of allowances to each affected unit based on its historic emissions.  As of December 31, 2001, it is expected that Cleco Power has sufficient allowances for 2002.  Evangeline has allowances in excess of those required for compliance.  PEP and APP will be required to purchase allowances for 2002.  The amount of allowances to be purchased in 2002 will be determined by the amount of generation at each plant.

          The Clean Air Act also requires the EPA to revise NOx emission limits for existing coal-fired boilers.  In November 1996, the EPA finalized rules lowering the NOx emission rate for certain boilers, including Rodemacher Unit 2 and Dolet Hills Unit 1, which are owned by Cleco Power.  Under this rule, Rodemacher Unit 2 and Dolet Hills Unit 1 would have had to meet this new emission rate by January 1, 2000.  The rule also allows an option to "early elect," that is, achieve compliance with a less restrictive NOx limit beginning January 1, 1997.  Cleco Power exercised this option in December 1996.  Early election protects Cleco Power from any further

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 reductions in the NOx permitted emission rate until 2008.  Rodemacher Unit 2 and Dolet Hills Unit 1 have been in compliance with the NOx early election limits since 1998 and are expected to continue to be in compliance in 2002 without undergoing significant capital improvements.  Significant future reductions in NOx emission limits may require modification of burners or other capital improvements at either or both of the units.

          NOx emissions from Evangeline's and PEP's generating units fall well within EPA limits, as the units use a combination of natural gas as a fuel and modern turbine technology that reduces NOx emissions to immaterial levels.  It is likewise expected that APP's NOx emissions will fall well within EPA's limits.

          Air and water permits issued in July 2000 by the LDEQ to APP were judicially appealed by APP-related Petitioners in early August 2000.  APP is constructing and will own and operate a new electric generating plant near Eunice, Louisiana.  APP-related Petitioners filed their appeals to the air and water permits in the 19th Judicial District Court in Baton Rouge, Louisiana.  APP-related Petitioners asked the court to reverse the air and water permits issued by the LDEQ and allege that LDEQ's decision to issue the permits was arbitrary, capricious and procedurally inadequate.  APP-related Petitioners have also asked the court to stay APP's power plant construction activities pending resolution of the litigation.  APP has denied APP-related Petitioners' allegations and is vigorously defending the validity of the permits issued to it by the LDEQ.  The permits could be upheld, r eversed, or remanded in whole or in part.  If the permits were to be reversed in material part by the court, APP may be required to cease its construction of the generating plant temporarily or permanently, depending on the nature and details of the reversal.  If the court were to remand the permits, without reversing them, to the LDEQ for further proceedings, APP's continuation of construction of the generating plant may be jeopardized, depending upon the nature and details of the remand.  Oral arguments on the appeal of these permits were held on February 5, 2001.  In its decision issued on February 23, 2001, the court ordered the matter remanded to the LDEQ but did not vacate the permits or halt construction.  On December 17, 2001, the Court signed its Order formally remanding this matter to the LDEQ, ordering LDEQ to, among other things, (1) request additional information from APP regarding alternative site analysis; (2) allow for a new public comment per iod and public hearing; and (3) reconsider its permit decisions in light of additional information and comments, and issue a revised basis for decision.  The parties are in the process of attempting to determine if sufficient common ground exists to settle this matter.  Although the ultimate outcome of this action cannot be predicted at this time, based on information currently available to Cleco, management does not believe the outcome of this action will have a material adverse effect on Cleco's financial condition or results of operations.

          An air permit issued by the LDEQ in August 2000 to PEP was judicially appealed by PEP-related Petitioners.  Similarly, the PEP-related Petitioners judicially appealed the water permit issued by LDEQ in June 2001.  PEP is constructing and will own and operate a new electric generating plant near Perryville, Louisiana.  PEP-related Petitioners filed their appeals of the air and water permits in the 19^th Judicial District Court in Baton Rouge, Louisiana, alleging that the issuance of the permits violates the Louisiana Constitution, the public trustee doctrine and state

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 and federal environmental laws.  In January 2002, following a confidential settlement agreement reached between PEP and most of the PEP-related Petitioners, the Court dismissed with prejudice the judicial appeals of the air and water permits.  The settlement will not have a material adverse effect on Cleco's financial condition or results of operations.

Water Quality

          Cleco has received from the EPA all NPDES permits required under the Clean Water Act for discharges from its five generating stations.  NPDES permits have fixed dates of expiration, and Cleco has applied for renewal of these permits within the applicable time periods.  The Office of Water Resources of the LDEQ requires facilities which discharge wastewater into Louisiana waters to be permitted under the LPDES.  Cleco has applied for and received LPDES permits for its five generating stations.

          The federal Clean Water Act, which was passed in 1972, contains provisions requiring the EPA to evaluate all bodies of water within its jurisdiction to determine if they meet water quality standards and to establish a program to bring non-compliant bodies of water into compliance with the standards.  Given the enormous number of bodies of water required to be evaluated and the complexity of standards set forth in the Clean Water Act, the EPA has not completed the requirements.  In the last few years, environmental groups have sued the EPA over the failure to address their requirements of the Clean Water Act.  In October 1999, the EPA received a federal court order to develop and implement TMDLs for all impacted streams in Louisiana.  The TMDLs will restrict the amount of specific covered pollutants, which may be discharged under revised permits, which will incorporate the limitations of TMDL s.  The EPA has released TMDLs for copper, oxygen demanding substances and nutrients on certain water bodies, none of which have had a material impact on Cleco.  Cleco continues to evaluate the potential impact of TMDLs limitations currently being developed by LDEQ and EPA.

          During the 2001 session of the Louisiana Legislature, legislation was passed which required the Department of Natural Resources to evaluate the need for new regulations to ensure that Louisiana's water resources are managed in an effective manner.  The agency is evaluating water use and the status of Louisiana's aquifers to determine what regulations may be necessary.  Management believes that any new regulations will not have a material adverse effect on Cleco's financial condition or results of operations.

Solid Waste Disposal

          The Solid Waste Division of the LDEQ has adopted regulations and a permitting system for the management and disposal of solid waste generated by power stations.  Cleco has received all required permits from the LDEQ for the on-site disposal of solid waste generated at its generating stations.

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          Cleco produces certain wastes at its five generating stations and at other locations that are classified as hazardous.  The Hazardous Waste Division of the LDEQ regulates these wastes and has issued identification numbers to the sites where such wastes are produced.  Cleco does not treat, store or dispose of these wastes on-site; therefore, no permits are required.  All hazardous wastes produced by Cleco are disposed of at federally permitted hazardous waste disposal sites.

Toxics Release Inventory

          The TRI is a part of the Emergency Planning and Community Right to Know Act and is administered by the EPA.  The TRI is an annual reporting requirement for industrial facilities on about 650 substances that they release into air, water and land.  The TRI ranks companies based on how much of a particular substance they release on a state level and a parish (county) level.  Cleco was exempt from the reporting requirements of the TRI until the EPA added seven new industry groups, including electric utility facilities, to the TRI in May 1997.  Annual reports are due to the EPA on July 1^st following the reporting year-end.  Cleco has submitted timely TRI reports on its 1998, 1999, and 2000 activities, and the TRI rankings are made available to the public.  The rankings do not result in any federal or state penalties and have not caused significant adverse pu blic perceptions of Cleco.  Management is aware of the potential adverse effects and is continuing to monitor the TRI process.  Management is currently taking steps such as increasing the recycling of fly ash at Dolet Hills to protect against possible negative public perceptions of Cleco as a result of the TRI.

Electric and Magnetic Fields

          The possibility that exposure to EMFs emanating from electric power lines, household appliances and other electric devices may result in adverse health effects or damage to the environment has been a subject of recent public attention.  Cleco Power funds research on EMFs through various organizations.  The scientific research conducted to date concerning the effects of EMFs has not led to any definitive results, but research is continuing.  Lawsuits alleging that the presence or use of electric power transmission and distribution lines has an adverse effect on health and/or property values have arisen in several states against electric utilities and others.  Cleco Power is not a party in any lawsuits related to EMF's.

          Midstream does not own any electric power lines.

Customers

          No customer accounted for 10% or more of Cleco's consolidated revenues in 2001, 2000 or 1999.  Additional information regarding Cleco's sales and revenues is set forth in "Management's Discussion and Analysis of Financial Condition and Results of Operations - Consolidated Results of Operations" and "Results of Operations - Continuing Operations" on pages 17-24 of the 2001 Annual Report to Shareholders, which is filed as Exhibit 13 to this Report and incorporated herein by reference.

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          For information on Cleco's construction program, financing and related matters, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition - Cash Generation and Cash Requirements" on pages 26-29 of the 2001 Annual Report to Shareholders, which is filed as Exhibit 13 to this Report and incorporated herein by reference.

ITEM 2.     PROPERTIES

CLECO POWER

          All of Cleco Power's electric generating stations and all other electric operating properties are located in the state of Louisiana.  Cleco Power considers all of its properties to be well maintained, in good operating condition and suitable for their intended purposes.

Electric Generating Stations

          As of December 31, 2001, Cleco Power either owned or had an ownership interest in three steam electric generating stations and a gas turbine with a combined electric generating capacity of 1,366,90 kW.  For additional information regarding Cleco Power's generating facilities, see "Operations - Cleco Power - Power Generation" in Item 1 of this Report.

Electric Substations

          As of December 31, 2001, Cleco Power owned 62 active transmission substations and 175 active distribution substations.

Electric Lines

          As of December 31, 2001, Cleco Power's transmission system consisted of approximately 67 circuit miles of 500 kV lines; 462 circuit miles of 230 kV lines; 663 circuit miles of 138 kV lines; and 17 circuit miles of 69 kV lines.  Cleco Power's distribution system consisted of approximately 3,375 circuit miles of 34.5 kV lines and 7,548 circuit miles of other lines.

General Properties

          Cleco Power owns various properties, which include a seven-story headquarters office building, regional offices, service centers, telecommunications equipment and other facilities owned for general purposes.

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Title

          Cleco Power's electric generating plants and certain other principal properties are owned in fee.  Electric transmission and distribution lines are located either on private rights-of-way or along streets or highways by public consent.

          Substantially all of Cleco Power's property, plant and equipment is subject to a lien securing obligations of Cleco Power under an Indenture of Mortgage, which does not impair the use of such properties in the operation of its business.

MIDSTREAM

          Midstream considers all of its properties to be well maintained, in good operating condition and suitable for their intended purposes.

Electric Generation

          As of December 31, 2001, Midstream owned one steam electric generating station (Evangeline) with an electric generating capacity of 775,000 kW.  In addition as of such date, Midstream had 864,000 kW of net generating capacity under construction and 78,500 kW of net generating capacity in operations through APP and PEP.  For additional information regarding Midstream's generating facilities, see "Operations - Midstream" in Item 1 of this Report.

Oil and Gas Related

          As of December 31, 2001, Midstream had an ownership interest in 415 miles of gas gathering and transmission pipeline in Texas and Louisiana as well as oil and gas producing properties in Texas.

Title

          Midstream's assets are owned in fee.  Evangeline is subject to a lien securing obligations under an Indenture of Mortgage, which does not impair the use of such properties in the operation of its business.  Various other properties also are subject to mortgages associated with the debt used to acquire such properties.

ITEM 3.      LEGAL PROCEEDINGS

CLECO

          For information on legal proceedings affecting Cleco, see Notes to Consolidated Financial Statements - Note 16 - Legal Proceeding: Fuel Supply - Lignite, - Note 17 -LDEQ Litigation on pages 57-58 and 58, respectively, of the 2001 Annual Report to Shareholders, which is filed as Exhibit 13 to this Report and incorporated herein by reference.

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CLECO POWER

          For information on legal proceedings affecting Cleco Power, see Notes to Cleco Power's Financial Statements - Note 11 - Legal Proceeding: Fuel Supply - Lignite in Item 8 of this Report.

CLECO

          There were no matters submitted to a vote of security holders of Cleco during the fourth quarter of 2001.

CLECO POWER

          The information called for by Item 4 with respect to Cleco Power is omitted pursuant to Instruction I(2)(c) to Form 10-K (Omission of Information by Certain Wholly-Owned Subsidiaries).

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          The names of the executive officers of Cleco and certain subsidiaries, their positions held, five-year employment history, ages and years of service as of December 31, 2001, are presented below.  Executive officers are appointed annually to serve for the ensuing year or until their successors have been appointed.

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ITEM 5.     MARKET FOR CLECO'S AND CLECO POWER'S
                   COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

CLECO

          Cleco's common stock is listed for trading on the NYSE and the Pacific Stock Exchange.  For information concerning the high and low sales prices for Cleco's common stock as reported on the NYSE Composite Tape and dividends paid per share during each calendar quarter of 2001 and 2000, see the Notes to Consolidated Financial Statements - Note 22 - Miscellaneous Financial Information (Unaudited) on page 60 of the 2001 Annual Report to Shareholders, which is filed as Exhibit 13 to this Report and incorporated herein by reference.

          Subject to the prior rights of the holders of the respective series of Cleco's preferred stock, such dividends as determined by the Board of Directors of Cleco may be declared and paid on the common stock from time to time out of funds legally available therefore.  The provisions of Cleco's charter applicable to preferred stock and certain provisions contained in the debt instruments of Cleco under certain circumstances restrict the amount of retained earnings available for the payment of dividends by Cleco.  The most restrictive covenant requires that common shareholders' equity be not less than 30% of total capitalization, including short-term debt.  At December 31, 2001, approximately $68.7 million of retained earnings were not restricted.  On January 25, 2002, Cleco's Board of Directors declared a quarterly dividend of $0.22 per share, which dividend was paid on February 15, 2002 to comm on shareholders of record on February 4, 2002.

          As of March 1, 2002, there were 8,990 holders of record of Cleco's common stock, and the closing price of Cleco's common stock as reported on the NYSE Composite Tape was $21.69 per share.

CLECO POWER

          There is no market for Cleco Power's common equity units.  All of Cleco Power's outstanding common equity units are owned by its parent, Cleco.  Distributions on Cleco Power's common equity units will be paid when and if declared by Cleco Power's Board of Managers.  Cleco Power's current credit agreement contains some restrictions on its ability to pay cash distributions on its common equity units.  Any future distributions also may be restricted by any credit or loan agreements that Cleco Power may enter into from time to time.

          Certain provisions contained in the debt instruments under certain circumstances restrict the amount of equity available for the distribution to Cleco by Cleco Power.  The most restrictive covenant requires that member's equity be not less than 30% of total capitalization, including short-term debt.  At December 31, 2001, approximately $169.7 million of member's equity was not restricted.

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          The following table shows the distributions or dividends paid by Cleco Power, or its predecessor, Utility Group, to Cleco since July 1999

          Cleco Power's predecessor had common shares before December 31, 2000, the date of its merger with Cleco Power.  After the merger, Cleco Power replaced common shares with common units.

ITEM 6.     SELECTED FINANCIAL DATA

CLECO

          The information set forth in "Five-Year Selected Financial Data (Unaudited)" on page 62 of the 2001 Annual Report to Shareholders is incorporated herein by reference; such information is filed as Exhibit 13 to this Report.  This information should be read in conjunction with the Consolidated Financial Statements and the related Notes thereto set forth on pages 35-60 of the 2001 Annual Report to Shareholders, which is filed as Exhibit 13 to this Report and incorporated herein by reference.

CLECO POWER

          The information called for by Item 6 with respect to Cleco Power is omitted pursuant to instruction in I(2)(a) to Form 10-K (Omission of Information by Certain Wholly-Owned Subsidiaries).

ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                   CONDITION AND RESULTS OF OPERATIONS

CLECO

          The information set forth in "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 17-34 of the 2001 Annual Report to Shareholders is incorporated herein by reference; such information is filed as Exhibit 13 to this Report.

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CLECO POWER

MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS

          The following analysis should be read in combination with the financial statements and notes of Cleco Power contained in Item 8 of this Report.  Cleco Power is providing the following narrative analysis of the results of its operations in lieu of management's discussion and analysis of financial condition and results of operations in accordance with Instruction I(2)(a) to Form 10-K (Omission of Information by Certain Wholly-Owned Subsidiaries).

          Retail rates for residential, commercial, and industrial customers and other retail sales are regulated by the LPSC.  Retail rates consist of a base rate and a fuel rate.  Base rates are designed to allow recovery of the cost of providing service and a return on utility assets.  Fuel rates fluctuate while allowing recovery of, with no profit, the majority of costs of purchased power and fuel used to generate electricity.  Rates for transmission service and wholesale power sales are regulated by the FERC.  Energy marketing revenues are based on the electric and natural gas markets, which are affected by supply and demand of those commodities and marketing strategies.

          Residential customers' demand for electricity is affected by weather.  Weather is generally measured in cooling degree-days and heating degree-days.  A cooling degree-day is an indication of the likelihood of a consumer utilizing air conditioning, while a heating degree-day is an indication of the likelihood of a consumer utilizing heating.  An increase in heating degree-days does not produce the same increase in revenue as an increase in cooling degree-days because customers can choose an alternative fuel source for heating, such as natural gas.  Normal heating and cooling degree-days are calculated for a month by separately calculating the average actual heating and cooling degree-days for that month over a period of approximately 30 years.

          Commercial and industrial customers' demand for electricity is less affected by the weather and is primarily dependent upon the strength of the economy in the service territory and the nation.  Cleco Power's two largest customers manufacture wood products, so its sales to industrial customers are affected by the worldwide demand for those products.

          Sales growth to retail electric customers has averaged 3.1% over the last five years, and we expect it to range from 2% to 3% per year during the next five years.  The levels of future sales will depend upon factors such as weather conditions, customer conservation efforts, retail marketing and business development programs, and the economy of the service area.  Some of the issues facing the electric utility industry that could affect sales include:

          Energy marketing sales primarily are affected by demand and supply of energy, market prices, and transmission constraints.

          Changes in fuel and purchased power expenses reflect fluctuations in fuel used for generation, fuel costs, availability of economic power, and deferral of expenses for recovery from customers through fuel adjustment clauses in subsequent months.

          Historically, changes in the cost of generating fuel and purchased power have not affected net income because substantially all such costs are passed on to customers through fuel adjustment clauses.  These adjustments are audited monthly and are regulated by the LPSC (representing about 93% of the total fuel cost adjustment) and the FERC.  Until approval is received, the adjustments are subject to refund.

          Coal and lignite are obtained both under long-term contracts and through the spot market.  Natural gas is purchased under short-term contracts.  Cleco Power has several power contracts with two power marketing companies for 705 MW of capacity in 2002 and 2003, increasing to 760 MW of capacity in 2004.  Power is purchased from other utilities and other marketers to supplement Cleco Power's generation at times of relatively high demand when the purchase price of the power is less than Cleco Power's cost of production.  However, transmission capacity must be available to transport the purchased power to Cleco Power's system in order for Cleco Power to be able to utilize the power.  During 2001, 40% of Cleco Power's energy requirements were met with purchased power, up from 34% in 2000 and 27% in 1999.

          In future years, Cleco Power's power plants may not supply enough power to meet its growing native load.  Because of its location on the transmission grid, Cleco Power relies on one main supplier of electric transmission, and constraints sometimes limit the amount of purchased power it can bring into its system.  The power contracts described above are not expected to be affected by such constraints.

          An affiliate of Cleco owns and operates natural gas pipelines at two of Cleco Power's power plants where natural gas is used as a primary fuel.  These pipelines increase access to natural gas markets and lower the cost of gas supplies.

          Other operations expenses are affected, among other things, by the cost of employee benefits, such as health care, the number of employees, changes in actuarial assumptions, and

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 capacity charges.  Maintenance expense generally is driven by the physical characteristics of the plant as well as planned preventive maintenance.

Results of Operations

Year ended December 31, 2001 compared to Year ended December 31, 2000
          Cleco Power's net income for the year ended December 31, 2001 was $59.1 million compared to $59.9 million in 2000.  The decrease largely was due to lower margins from marketing and trading operations as well as lower base revenues from retail customer sales, which were partially offset by higher transmission and wholesale revenues.  There was a $22.1 million increase in operating expenses in 2001 compared to 2000 primarily because of higher operations expense and purchases for energy marketing.

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          Base revenues from energy sales during 2001 decreased $6.6 million compared to 2000 due to lower kilowatt hour sales.  Offsetting this decrease was an increase of $1.8 million in transmission-related base revenues and a $0.8 million increase in miscellaneous base revenues, resulting in a net $4.0 million decrease in base revenues compared to 2000.

          The following chart indicates the percentage variance from normal conditions and from the prior year for cooling/heating degree-days.

          Short-term electric sales to other utilities increased significantly during 2001.  The increase primarily was due to sales to the city of Lafayette under a one-year replacement energy contract that began in December 2000, and sales to the city of Ruston under a three-year contract to supply all of its power beginning June 1, 2001.

          Fuel cost recovery revenues collected from customers increased primarily because the average per unit cost of fuel was $2.92 per MMBtu in 2001 versus $2.72 per MMBtu in 2000.  The increase in the average per unit cost of fuel was primarily a result of a 7.3% increase in the per unit cost of natural gas for 2001 compared to 2000.

          An earnings review settlement was reached with the LPSC in 1996 under which accruals for estimated customer credits are sometimes required.  Cleco Power accrued $1.8 million during 2001 compared to $1.2 million in 2000.  The amount of credit due customers, if any, is determined by the LPSC annually, based on results for the 12-month period ending September 30 of each year.  For additional information, see the Notes to Cleco Power's Financial Statements - -  Note 9 - "Accrual of Estimated Customer Credits" in Item 8 of this Report.

          Energy marketing revenues for 2001 increased $13.1 million compared to 2000.  The increase in energy marketing revenues primarily is due to excess natural gas marketed and an increase in the price of natural gas in 2001 compared to 2000.  Cleco Power's energy trading activity does not qualify for normal purchases/normal sales exemption as defined by SFAS No. 133.  SFAS No. 133 requires those open positions to be reported at fair market value or "marked-to-market."  The mark-to-market related to these open positions was a gain of less than $0.1 million for 2001 versus a gain of $0.6 million in 2000.

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          Operating expenses increased $22.1 million, or 4.2%, during 2001 compared to 2000.  Energy marketing expenses increased $16.2 million for 2001 compared to 2000 largely because of the same factors that caused increases in energy marketing revenues.  Fuel expense increased $2.5 million because of increased energy prices mainly driven by increases in the price of natural gas.  This increase was offset by a one-time $6.6 million adjustment reflecting the recognition of the recovery of fuel-related costs that had not been previously collected from utility customers.  The fuel cost recovery was approved by the LPSC to be collected from customers and was therefore recognized, along with associated interest, in the fourth quarter of 2001.  Purchased power expense decreased $4.0 million during 2001 compared to 2000 principally as a result of a decrease in the price of power purchased.   The increase in other operations expense for 2001 compared to 2000 primarily was due to a $6.3 million increase in capacity payments, a $3.8 million increase in vacation accrual, and an increase of $3.3 million in employee benefits.

          Interest income increased $6.5 million for 2001 compared to 2000 largely because of the interest related to the recognition of the recovery of fuel-related costs that had not been previously collected from utility customers.  Because the recovery of the fuel-related costs is a one-time adjustment, we do not expect the amount of interest income in future periods to be as much as experienced in 2001.

          Interest expense decreased $1.9 million in 2001 compared to 2000 primarily due to a decrease in medium-term notes and a decrease in the interest rates paid on commercial paper.

          AFUDC increased to $1.2 million in 2001 from $0.6 million because of an increase in average construction.  Allowance for funds used during construction represents Cleco Power's estimated cost of financing LPSC and FERC rate-regulated construction and is not a current source of cash.  Regulatory bodies allow for a return on and recovery of AFUDC when setting rates for utility services.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                    MARKET RISK

CLECO CONSOLIDATED

          For information concerning the quantitative and qualitative disclosures about market risk,

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 see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition - Financial Risk Management" on pages 32-33 of the 2001 Annual Report to Shareholders, which is filed as Exhibit 13 to this Report and incorporated herein by reference.

FINANCIAL RISK MANAGEMENT

          The market risk inherent in Cleco Power's market risk-sensitive instruments and positions is the potential change arising from changes in the short-, medium- and long-term interest rates; the commodity price of electricity and the commodity price of natural gas.  Generally, the market risk-sensitive instruments and positions are considered normal purchases/normal sales as defined by SFAS No. 133, as amended and clarified by the DIG and are excluded from mark-to-market accounting.  However, Cleco Power does have positions that are required to be marked-to-market.  Cleco Power's exposure to market risk, as discussed below, represents an estimate of possible changes in the fair value or future earnings that would occur, assuming possible future movements in the interest rates and the commodity price of electricity and natural gas.  Management's views on market risk are not necessarily indic ative of actual results, nor do they represent the maximum possible gains or losses.  The views do represent, within the parameters disclosed, what management estimates may happen.

Interest

          Cleco Power has entered into various fixed- and variable-rate debt obligations.  See the Notes to Cleco Power's Financial Statements, Note 5 - "Debt" in Item 8 of this Report for details.  The calculations of the changes in fair market value and interest expense of the debt securities are made over a one-year period.

          As of December 31, 2001, the carrying value of Cleco Power's long-term, fixed-rate debt was approximately $336.3 million, with a fair market value of approximately $357.8 million.  Fair value was determined using quoted market prices.  Each 1.0% change in the average interest rates applicable to such debt would result in a change of approximately $18.0 million in the fair values of these instruments.  If these instruments are held to maturity, no change in stated value will be realized.  As of December 31, 2001, the carrying value of Cleco Power's short-term, variable-rate debt was approximately $63.7 million, which approximates the fair market value.  Each 1.0% change in the average interest rates applicable to such debt would result in a change of approximately $637,000 in our pre-tax earnings.  Cleco Power monitors its mix of fixed- and variable-rate debt obligations, which consist of commercial paper, in light of changing market conditions and from time to time may alter that mix by, for example, refinancing balances outstanding under its variable-rate commercial paper program with fixed-rate debt.

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Market Risk

          Management believes Cleco Power has in place controls to help minimize the risks involved in marketing and trading.  Controls over marketing and trading consist of a back-office (accounting) and mid-office (risk management) independent of the marketing and trading operations, oversight by a risk management committee comprised of company officers and a daily risk report which shows VAR and current market conditions.  Cleco's Board of Directors appoints the members of the risk management committee.  VAR limits are set and monitored by the risk management committee.

          Cleco Power engages in marketing and trading of electricity and natural gas and provides fuel for generation and purchased power to meet the electricity demands of customers.  Financial positions that are not used to meet the electricity demands of customers are marked-to-market.  At December 31, 2001, the net mark-to-market impact for those positions was a gain of less than $0.1 million.

          Cleco Power utilizes a VAR model to assess the market risk of its positions that are used in marketing and trading operations, including derivative financial instruments.  VAR represents the potential loss in fair values for an instrument from adverse changes in market factors for a specified period of time and confidence level.  The VAR is estimated using a historical simulation calculated daily assuming a holding period of one day, with a 95% confidence level for natural gas positions and a 99.7% confidence level for electricity positions.  Total volatility is based on historical cash volatility, implied market volatility, current cash volatility and option pricing.

          Based on these assumptions, the high, low and average VAR for Cleco Power for the year ended December 31, 2001, as well as the VAR at December 31, 2001, and 2000, is summarized below:

          The following table summarizes the market value maturities of contracts with prices actively traded at December 31, 2001:

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          The information set forth on pages 35-61 of the 2001 Annual Report to Shareholders is incorporated herein by reference; such information is filed as Exhibit 13 to this Report.

To the Member and
Board of Managers of Cleco Power LLC:

In our opinion, the financial statements of Cleco Power LLC listed in the index appearing under Item 14(a)(1) in this Form 10-K present fairly, in all material respects, the financial position of Cleco Power LLC at December 31, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States of America.  In addition, in our opinion, the financial statement schedule of Cleco Power LLC listed in the index appearing under Item 14(a)(2) of this Form 10-K presents fairly, in all material respects, the information set forth therein when read in conjunction with the related financial statements.  These financial statements and financial statement schedule are the responsibility of Cleco Power LLC's management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.  We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 2 to the financial statements of Cleco Power LLC, effective January 1, 2001, of Cleco Power LLC adopted the provisions of Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities."

New Orleans, Louisiana
January 29, 2002, except for Note 13
as to which the date is February 8, 2002

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The accompanying notes are an integral part of the financial statements.

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Note 1 - Reorganization

          Effective July 1, 1999, Cleco Power reorganized into a holding company structure.  This reorganization resulted in the creation of a new holding company Cleco, which holds investments in several subsidiaries.  There was no impact on Cleco's Consolidated Financial Statements because the reorganization was accounted for similarly to a pooling of interest.  Shares of preferred stock in three series that did not approve the reorganization were redeemed for $5.7 million.  As of July 1, 1999, Cleco Power's common stock was no longer listed for trading on an exchange.

          On December 31, 2000, Utility Group merged into Cleco Power.  Prior to the merger, Cleco Power had nominal assets and liabilities.  As a result of the merger, Cleco Power acquired all of the assets and assumed all of the liabilities and obligations of Utility Group.

Note 2 - Summary of Significant Accounting Policies

GENERAL

          Cleco Power is an electric utility regulated by the LPSC which determines the rates Cleco Power can charge its customers.  Cleco Power serves approximately 250,000 customers, mainly in central Louisiana.

          The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

RECLASSIFICATIONS

          Certain reclassifications have been made to the 1999 and 2000 Cleco Power financial statements to conform to the presentation used in the 2001 Cleco Power financial statements.  These reclassifications had no effect on net income or total member's equity.

          Cleco Power maintains its accounts in accordance with the Uniform System of Accounts prescribed for electric utilities by the FERC, as adopted by the LPSC.  Cleco Power's retail rates are regulated by the LPSC, and its rates for transmission services and wholesale power sales are regulated by the FERC.  Cleco Power follows SFAS No. 71, which allows utilities to capitalize

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or defer certain costs based on regulatory approval and management's ongoing assessment that it is probable these items will be recovered through the ratemaking process.  During 2000 the LPSC staff developed a transition to competition plan that was presented to the LPSC.  In November 2001 the LPSC directed its staff to organize a series of meetings to more fully explore the unresolved issues in the plan.  The staff was also directed to report on the success or failure of the commencement of retail electric choice in surrounding states.  Any future plan adopted by the LPSC may affect the regulatory assets and liabilities recorded by Cleco Power if the criteria for the application of SFAS No. 71 cannot continue to be met.

          Pursuant to SFAS No. 71, Cleco Power has recorded regulatory assets and liabilities, primarily for the effects of income taxes, as a result of past rate actions of regulators.  The effects of potential deregulation of the industry or possible future changes in the method of rate regulation of Cleco Power could require discontinuance of the application of SFAS No. 71 in the future, pursuant to SFAS No. 101.  At December 31, 2001, Cleco Power had recorded $58.6 million of regulatory assets, net of regulatory liabilities, because of the regulatory requirement to flow through the tax benefits of accelerated deductions to current customers and an implied regulatory compact that future customers would fund these amounts when Cleco Power pays the additional taxes.  These differences occur over the lives of relatively long-lived assets, up to 30 years or more.  Under the current regul atory and competitive environment, Cleco Power believes these regulatory assets will be fully recoverable; however, if in the future, as a result of regulatory changes or increased competition, Cleco Power's ability to recover these regulatory assets would not be probable, then to the extent that such regulatory assets were determined not to be recoverable, Cleco Power would be required to write-off or write-down such assets.

PROPERTY, PLANT AND EQUIPMENT

          Regulated assets, utilized for retail operations and electric transmission and distribution properties, are stated at the cost of construction, which includes certain materials, labor, payroll taxes and benefits, administrative and general costs, and the estimated cost of funds used during construction.

          Cleco Power's costs of improvements to property, plant and equipment are capitalized.  Expenditures for repairs are expensed.  Upon retirement or disposition, the cost of depreciable plant and the cost of removal, net of salvage value, are charged to accumulated depreciation.  Annual depreciation provisions expressed as a percentage of average depreciable property were 3.27% for 2001, 3.27% for 2000, and 3.28% for 1999.

          Depreciation on property, plant and equipment is calculated primarily on a straight-line basis over the useful lives of the assets, as follows: