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Just Energy Customer Count Dips on Margin Discipline, Market Conditions; Margin Discipline Lifts Earnings

February 11, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

Just Energy reported a dip in its customer count for the quarter ending December 31, 2015, due to its continued margin discipline as well as competitive market conditions.

Specifically, Just Energy saw a net decline of 46,000 Residential Customer Equivalents from October 1, 2015 to December 31, 2015. This compares to a net increase of 4,000 RCEs from June 30, 2015 to September 30, 2015 and a net decline of 77,000 RCEs from March 31, 2015 to June 30, 2015.

Total Just Energy RCEs as of December 31, 2015 were 4.567 million, versus 4.613 million as of September 30, 2015 and 4.662 million a year ago.

Gross customer additions during the three months ended December 31, 2015 were 313,000, a 12% decrease from a year ago. Mass market customer additions of 122,000 during the three months ended December 31, 2015 decreased from the 187,000 added in the prior year, primarily due to market conditions as the commodity prices were lower and therefore, more competitive across all markets. Commercial customer additions of 191,000 during the quarter increased from the 167,000 gross customer additions in the prior year, primarily due to competitiveness in pricing.

Just Energy also attributed the net decline in customers to lower customer additions in North America and lower renewal rates for commercial operations. "Just Energy continues to actively focus on improving retained customers’ profitability rather than pursuing low margin growth," the company said

The combined attrition rate for Just Energy was 17% for the trailing 12 months ended December 31, 2015, a one percentage point increase from the 16% reported a year prior, and consistent with results for the three months ended September 30, 2015. Mass market attrition rates remained consistent at 27% compared to the prior year, which includes the impact from higher customer defaults in markets where Just Energy bears collection risk.

The margin discipline continues to drive higher earnings, with Just Energy reporting a 10% increase in Base EBITDA for the quarter ending December 31, 2015, at $55.7 million, versus $50.6 million a year ago (all $ Canadian)

Gross margin was $180 million for the quarter, versus $150 million a year ago, as a result of higher realized margin per customer in the period due to more disciplined pricing performance and the positive foreign exchange impact on gross margin earned in U.S. markets. Gross margin increased by $19.1 million over the prior comparable period as a result of the weaker Canadian dollar, with the remaining $10.7 million of additional gross margin resulting from operational improvements.

During the last quarter, Just Energy added or renewed 211,000 mass market customers at an average gross margin of $213 per RCE. This compares to 123,000 mass market customers lost at an average gross margin of $194 per RCE.

For the commercial segment, Just Energy added or renewed 304,000 commercial customers at an average gross margin of $84 per RCE during the quarter, whereas it lost 236,000 commercial customers at an average gross margin of $63 per RCE.

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