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Billy, I hope you don't mind. But I just spent a bundle to have access to the TT's archives... and this, I believe, is the first story written about Cleco's improprieties. Excerpts appear below: "Power Play" By Billy Gunn "A few years ago, says a former employee, a dictate descending from Cleco Corp.'s top floor to the trading floor was clear: maximize profits. So traders did. "The mantra was 'one corporation, one stock price,' and that gets you into all kinds of trouble," said Sam Sansing, a former trader now being sued by Cleco. It did get the utility in trouble with state and federal regulators, who ruled in 2003 and 2004 that Cleco used its regulated and unregulated businesses to unfairly manipulate electricity prices and pass high costs on to retail customers, who don't live in Alexandria. The questions now are: Did Cleco in the 1990s and early 2000s mingle those same businesses and divert profits away from the city of Alexandria, with which it had various contracts? Did Cleco buy higher-priced electricity than it could have and pass those rates to city ratepayers? Does Cleco owe the city and its residents money? If so, how much?" "What Sansing has told Alexandria officials and others is that the city was cheated routinely and with the same tools cited by the regulatory agencies. Alexandria utility officials wouldn't have known of alleged improprieties in energy transactions done by employees on Cleco's trading desk, said Sonny Craig, utility director for Alexandria. Indeed, city officials and employees are not schooled in the complex world of buying and selling electricity. They know how to crank up D.G. Hunter power plant and supply juice with its generators, which are turned on only in peak times because they're not efficient as Cleco's. Alexandria has contracts with Cleco to supply the city with wholesale electricity, and also to sell power from the city's D.G. Hunter power plant to other Cleco customers in peak energy-usage times, among other agreements. The city passes on to city users the costs for electricity purchased from Cleco." "Last spring, Sansing and fellow ex-Cleco employee David Pugh formed Energy Management Services, approached Mayor Ned Randolph and struck a deal: If EMS examined trading records from Cleco and found the utility owed money to the city, EMS would split the proceeds with Alexandria. In the summer months of 1997, 1998 and 1999, Cleco paid Alexandria a total of more than $3.1 million for D.G. Hunter-generated power sold via Cleco to other customers, Alexandria budget director David Johnson said. Those profits flowed into Alexandria's Utility Fund, Johnson said. EMS contends that amount could have been millions of dollars more. On the route to finding out if there were millions more to which the city is entitled, EMS and Alexandria also would try to find a way around a waiver Cleco persuaded Randolph to sign in April of 2003 that released Cleco's unregulated arm from any future claims by the city. However, Cleco balked when Randolph wrote the utility on May 12, 2004, asking for buy and sell records and other documents for EMS to review. There was no way, Cleco has said, the company would hand over what it deemed proprietary information to two ex-employees, both of whom signed confidentiality agreements when they left, Pugh in 1999 and Sansing in December 2002.... Cleco then went on the offensive, suing Pugh, Sansing and EMS in September 2004 for allegedly breaching the confidentiality agreements. Both men have since countersued, and now Cleco is trying to have all court testimony and legal discovery kept under wraps and the records sealed." "At Cleco in 2002 and before, they were not separated, FERC and the PSC found. Traders at CMT, the unregulated arm of Cleco, worked in the same room as those for Cleco Power, the regulated side, according to the 2004 report by the PSC. As a result of investigations, the PSC and FERC fined Cleco and ordered refunds totaling more than $16 million for a variety of transgressions and made the utility abide by a code of conduct. The refunds, which because of interest grew to $18 million, will go to Cleco utility customers and do not apply to the city of Alexandria. As part of the settlement, Cleco also agreed to separate its retail and wholesale trading desks. In 2002 and before, wholesale and retail trades were recorded in the same book and then assigned to regulated or unregulated trades, whichever was to Cleco's profit advantage, FERC and the PSC found." "Sansing's allegations on Cleco's past practices that might have been used to hurt Alexandria financially are lent some credence by the PSC report that documents the company's practices in regard to retail customers for 2000, 2001 and 2002. Sansing's allegations include: · A deal Cleco and the city cut in the 1990s to split profits from D.G. Hunter 50-50, minus costs, was soured when the utility lumped in unrelated Cleco costs to lessen Alexandria's cut. · Cleco electricity traders routinely bought high-priced juice from Cleco Power for Alexandria residents' consumption, when by contract they were supposed to buy it at higher prices only during peak times. Sansing said traders would buy electricity during the day and then others in the accounting department later would assign costs to the utility's benefit and at others' detriment. · Cleco hid proceeds from a futures contract it made with Ruston that would have supplied the North Louisiana city one summer with high-priced electricity. Because of wild spikes in electricity prices in 2000, traders were prohibited from speculating on a supply of power not within Cleco's capability. So Cleco backed up the future sale with D.G. Hunter's capabilities, without which Cleco could not have made the deal. But when summer came, Ruston found it didn't need all the power, and sold most of it back to Cleco at the agreed-upon price. Cleco allegedly received the payments from Ruston and never reported that profit to Alexandria officials, who were none the wiser because D.G. Hunter was never turned on. Sansing said the deal netted Cleco more than $3 million." "After EMS's agreement with the city last year, Cleco personnel told members of The Town Talk editorial board that if any money is owed to the city, it would be in the thousands of dollars, not the millions that Pugh and Sansing have alleged. "If it's only in the thousands of dollars, you wonder why Cleco is spending big bucks against two people in attorney fees," said Chris Roy Sr., Sansing's attorney."