TXU's Burke: Too Early to Tell if ERCOT Price Spikes Will Change Competitive Retail
Pricing Email This Story February 21, 2011
It's "too early to tell" if the weather-related price spikes in the ERCOT market
will change current retail pricing strategies, TXU Energy CEO Jim Burke said during
an earnings call Friday.
As first noted Friday (see 2/18), TXU saw continued churn in the quarter with a net
loss of 29,000 residential customers. This was due to the continued competitive
retail pricing environment during the quarter ending December 31, 2010, which was
sustained due to a lack of volatility in the ERCOT wholesale market. Burke told
investors that it is unclear at this time whether the recent spikes in ERCOT prices
would lessen the competitive pressures on retail pricing going forward.
Similar to recent quarters, TXU recorded customer retention levels at or above its
targets, and the net churn came from a slowdown in residential customer acquisitions,
given the "tough" retail pricing environment, Burke said.
TXU's retail electric revenues were lower for the year 2010 at $5.926 billion, versus
$6.231 billion a year ago. Lower average pricing decreased revenues by $429 million
reflecting declines in both the business and residential markets. Lower average
pricing reflected competitive activity in a lower wholesale power price environment
and a change in business customer mix. A 2% increase in sales volumes increased
revenues by $124 million, reflecting increases in both the business and residential
markets. A 4% increase in business markets sales volumes reflected a change in customer
mix resulting from contracts executed with new customers. Residential sales volumes
increased 1% reflecting higher average consumption driven by colder winter weather
and hotter summer weather, partially offset by the decline in residential customer
Total retail electricity volumes for 2010 were 51,589 GWh, versus 50,581 a year ago.
Residential retail volumes in 2010 were 28,208 GWh.
Energy Future Holdings' competitive segment also reported $8 million in lower bad
debt expense in 2010.