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Matters

A Year After Polar Vortex, Retail Supplier Returns to Customer Growth

March 12, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

Genie Energy, parent of IDT Energy and several other brands, saw a net increase in its retail energy customer count since last year's polar vortex, it disclosed in reporting fourth quarter earnings.

Genie Energy's total meters as of December 31, 2014 was 363,000 meters, up slightly from 362,000 as of September 30, 2014. As of December 31, 2013, Genie Energy had been serving 427,000 meters.

The meter count as of December 31, 2014 included 234,000 electric meters and 129,000 natural gas meters

During the three months ended December 31, 2014, Genie Retail added 55,000 gross meters compared to 56,000 thousand in the three months ended September 30, 2014 and 45,000 in the year-ago quarter.

The sequential decrease is seasonal and is reflective of the weather impact that typically reduces the rate of meter acquisitions generated by door-to-door programs in the first and fourth quarters, the company said. The year-over-year increase in part reflects the impact of meters acquired in Illinois, and of meters acquired through the Epiq Energy network marketing channel.

Genie Energy’s average monthly customer churn during the fourth quarter of 2014 decreased to 5.9% from the 6.2% level in both 3Q14 and 4Q13.

Genie Energy, which said that it has been more aggressive in pursuing customer acquisition, said that customer growth may slow in the first quarter of 2015 due to impacts from winter weather, but that it expects growth to speed up during the rest of 2015.

Genie Energy cited new markets it intends to enter as including service areas in Massachusetts, Ohio, Illinois, Maryland, and Pennsylvania.

In terms of Residential Customer Equivalents (RCEs), Genie Energy was serving 243,000 RCEs as of December 31, 2014, versus 248,000 RCEs as of September 30, 2014 and 315,000 a year ago. The decrease versus September 30, 2014 reflects the impact of newly acquired meters primarily in Illinois with relatively lower consumption and the churn of relatively higher consumption meters.

Genie Energy gross profit on electricity sales for the fourth quarter of 2014 was $13.3 million, versus $12.3 million in the year-ago quarter. Gross profit was lifted by an 11.9% increase in average revenue per kWh sold year-over-year, while the average cost per kWh decreased 5.4%.

In contrast, fourth quarter gross profit on gas sales was negative $0.2 million, compared to gross profit of $4.5 million in the year ago quarter. Genie cited the challenging environment for retail natural gas sales in several of its markets, where utilities, due to various credits, were selling natural gas below current market costs. Genie reduced its retail pricing to remain competitive with such utilities. Genie also cited higher transportation costs.

Genie Energy’s retail energy SG&A expense in 4Q14 increased to $11.5 million from $9.3 million in 4Q13. The increase was driven by increased customer acquisition expenses and personnel costs associated with Diversegy and Epiq, which were acquired in 4Q13, and whose costs are not reflected in 2013 results.

Genie Retail Energy generated Adjusted EBITDA of $1.4 million in 4Q14 compared to $7.0 million in the year ago quarter, primarily reflecting the reduction in natural gas gross profit and increased SG&A expense.

Genie Retail Energy generated a loss from operations in 4Q14 of $2.1 million compared to income from operations of $6.7 million in 4Q13. The year-over-year decrease includes a non-cash goodwill impairment of $3.6 million in 4Q14, which reduced the carrying amount of the goodwill from Diversegy and Epiq to zero

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