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Just Energy Maintains High Customer Growth Levels; Reports Lower Margins, Partly Due to Capacity Costs (Says Costs Will Now be Passed-Through to Customers) Just Energy reported customer growth for the three months ended March 31, 2013 in line with growth experienced during the three months ended December 31, 2012, but reported lower margins for the fiscal year ended March 31, 2013.
As of March 31, 2013 Just Energy's energy marketing segment reported serving 4.222 million long-term Residential Customer Equivalents (RCEs), versus 4.124 million as of December 31, 2012 and 3.870 million a year ago.
The net growth of 98,000 RCEs from December 31, 2012 to March 31, 2013 is essentially flat versus the net growth of 100,000 RCEs from September 30, 2012 to December 31, 2012.
U.S. electric RCEs as of March 31, 2013 were 2.551 million, versus 2.461 million as of December 31, 2012, and 2.063 million a year ago.
U.S. natural gas RCEs as of March 31, 2013 were 488,000, versus 481,000 as of December 31, 2012 and 551,000 a year ago.
For the quarter ending March 31, 2013, at the corporate level, Just Energy reported Adjusted EBITDA from continuing operations of $87.5 million, an 18% decrease from $107.1 million in the prior comparable quarter (all $ Canadian). Adjusted EBITDA from continuing operations excludes results from Just Energy's ethanol division, as Just Energy has commenced a process to dispose of the ethanol unit.
Profit for the quarter ended March 31, 2013 was $137.7 million, versus the year-ago loss of $76.9 million, with the change driven by mark-to-market impacts.
For the quarter ending March 31, 2013, at the corporate level, Just Energy gross margin was $157.7 million, down 8% from a year earlier (all $ Canadian), on lower gross margin contributions from Energy Marketing and the Momentis networking marketing division.
Electricity margin was down 24% compared with the prior comparable quarter. Electricity margin compression was seen in the northeastern states because of increased capacity costs. Historically these costs have been lower and relatively stable, the company said. Year over year these costs have increased significantly, thereby compressing margins particularly in the fourth quarter, the company said.
"Going forward, the Company will look to structure contracts to pass these costs on to the customer as well as effectively hedge capacity costs, to mitigate future impact to gross margin," Just Energy said.
In discussing margins for the entire fiscal year, Just Energy also reported price competition in Texas as reducing margins.
Gas margins for the quarter ending March 31, 2013 were up 18% despite a 10% decrease in customer base as a result of higher consumption in the current year compared with record warm temperatures in the fourth quarter of fiscal 2012.
The table below depicts the annual gross margin on contracts of mass market (consumer) and commercial customers signed during the fiscal year 2013.
For 2013, annual customer aggregation costs for US electric customers were $138/RCE for residential customers, $143/RCE for commercial customers, and $31/RCE for commercial customers signed through brokers.
For 2013, annual customer aggregation costs for US gas customers were $150/RCE for residential customers, $129/RCE for commercial customers, and $27/RCE for commercial customers signed through brokers.
Attrition rates have declined from 15% in fiscal 2011, to 13% in fiscal 2012, and 12% in fiscal 2013. In the U.S., the electricity attrition rate was 12%, and the gas attrition rate was 24%.
Overall, renewal rates were 69% for fiscal 2013, up from 64% in fiscal 2012.
Bad debt expense for the three months ended March 31, 2013 was $8.3 million, an increase of 19% from $7.0 million in the prior comparable quarter. Revenue earned in markets where Just Energy bears the collection risk increased by 19% quarter over quarter.
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May 16, 2013
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Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com
FY 2013 # of Customers
Mass market added/renewed $178 1,023,000
Mass market lost $180 558,000
Commercial added/renewed $74 1,245,000
Commercial customers lost $82 445,000
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