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Vistra CEO: Only Way To Grow TXU Brand Is Through Acquisition, But It's Not The Right Time

Absent M&A, Retail Growth Will Come From New Brands, Segmentation

Vistra "Actively" Looking To Acquire ERCOT CCGTs

May 19, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Any meaningful customer growth for the TXU Energy brand will likely need to come from acquisitions, but now is not the right time to purchase retail books, Vistra Energy CEO Curt Morgan said during an earnings call yesterday

"I think when you're talking about the TXU Energy brand, the only way to really, I think, to grow that is to buy somebody who is in that segment of the market, and then over time rebrand that [as] TXU Energy," Morgan said

While Vistra is "open" to such acquisitions, Morgan said, "We don’t think this is the right time to buy retail because of where wholesale prices are, and there is not a lot of fear in the market. But when we see another price spike -- which I know that everybody's 'don't hold your breath' -- but when we do, which I believe will happen in Texas, that will shake the tree a little bit as it always does in Texas, and that's when [it's] the right time to look at retail acquisitions."

However, that doesn't mean Vistra is not focused on organic retail growth; rather, it will have to come from other retail brands focused on different customer segments.

Vistra recently launched a new "no frills" brand Express Energy (see story here) and previously launched charity-affinity brand 4Change Energy.

"[W]e'll continue to look at brands and how we fill out the needs of customers, and we do believe over time, as we fill that out, we will ultimately grow [our] customer base on an overall basis," Morgan said

"I think growing customer count overall will probably come by positioning different brands along sort of the chain, and we're doing that by introducing new brands, and we will probably do another one either through an acquisition, or we'll start up an organic brand to try to compete with different segments in the market," Morgan said

While now is not the right time for retail M&A, Morgan emphasized that Vistra is exploring generation acquisitions.

"I think we have expressed this pretty clearly, in ERCOT, that we are interested in additional combined cycle plants, and I'll just say that we're actively looking at opportunities in ERCOT. We think this would be a good time to acquire, and so we'll see if that proves out, but we're going to try to remain, as I've said, we're going to remain disciplined around this," Morgan said

Morgan was less enthused about acquisitions in other markets, specifically noting rumors about Calpine pursuing strategic alternatives, stressing that Vistra would not overpay for a company solely to expand outside of Texas

However, as noted by RetailEnergyX.com today, The Wall Street Journal has reported that Vistra Energy, "has made a takeover approach," to Dynegy,

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