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Dominion on Exit from Retail Electric Marketing Biz: "Doesn't Fit Our Business Model", Notes Lack of Assets to Match Book
Dominion ultimately decided to exit the competitive electric retail market because, "[i]t just doesn’t fit our business model," Tom Farrell, Dominion CEO, said on an earnings call Friday.
Dominion's decision to sell its competitive retail electric business had been first reported by EnergyChoiceMatters.com Friday morning.
Farrell noted the shrinking margins seen in the retail electric market, not just for Dominion, but across its peers.
"[Retail] gas is a very different business. Our products and services [retail business] is a very different business," Farrell said.
In particular, Farrell noted that in its largest retail electric markets, Dominion does not own significant merchant generation with which it can match its obligations.
Dominion did not provide any more details about the retail electric business sale process, but said that the, "[s]ale process is underway, and [we] expect to have the transaction complete in the next several months."
As reported Friday, the retail electric book has about 683,000 customers
The sale of the retail electric business will seemingly leave Dominion Retail with about 1.457 million customers -- 518,200 natural gas customers, and 938,500 Products & Services customers. However, it was not clear what amount, if any, of the Products & Services customer base is being cross-sold a retail electric product, and what impact the electric book sale would have on such service and/or retention.
In aggregate, Dominion Retail produced EBIT of $115 million for the year 2013, on $1.6 billion in operating revenue.
As noted in our Friday update, Dominion sees investment in solar generation projects as providing more stable long-term returns than its retail electric business.
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February 3, 2014
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Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com
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