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Return Of Low Income Customers To New York Default Service Cited In Decrease In Genie Retail Energy Customer Count

May 3, 2018

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

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In reporting earnings this morning, Genie Energy said that Genie Retail Energy's customer base declined versus December 31, 2017 due, in part, to the required return of low-income customers in New York to default service, as well as a strategic decision to pull back customer acquisition efforts in certain territories

As of March 31, 2018, Genie Retail Energy (GRE) was serving 373,000 meters, versus 412,000 as of December 31, 2017 and 418,000 a year ago

In terms of RCEs, Genie Retail Energy was serving 285,000 meters as of March 31, 2018, versus 301,000 as of December 31, 2017 and 287,000 a year ago

"The decreases reflect the regulatorily mandated return of low-income customers in New York served by retail energy providers (REPs) to the incumbent utilities as well as GRE’s strategic decision to pull back customer acquisition efforts in certain territories," Genie said

Pursuant to the December 2016 order of the New York State Public Service Commission prohibiting ESCOs in New York State from serving customers enrolled in utility low-income assistance programs (low-income customers), GRE returned 18,700 meters (representing approximately 10,600 RCEs) to their incumbent utilities in 1Q18.

Gross meter acquisitions during Q1 2018 decreased to 55,000 from 84,000 in the year-ago quarter and 62,000 in the prior sequential quarter as customer acquisition programs shifted to emphasize higher value customers while avoiding certain "riskier" jurisdictions, Genie said. This shift has led to a steady increase in average customer size over the past year.

The mandated return of low-income customers in New York drove an increase in GRE’s average monthly customer churn to 7.6% from 6.1% in the year ago quarter and 6.9% in the prior quarter. Exclusive of the impact of these low-income customers, churn in the first quarter would have been comparable to churn in recent quarters.

GRE’s income from operations increased to $10.3 million and Adjusted EBITDA increased to $10.9 million for Q1 2018, from $9.0 million and $9.5 million, respectively, in Q1 2017, primarily reflecting the decrease in customer acquisition costs.

GRE’s gross profit was $24.5 million for Q1 2018, versus $24.8 million a year ago. GRE’s gross margin percentage decreased to 27.4% in Q1 2018 from 34.8% a year ago as cost per commodity unit increased more rapidly than revenue per unit sold of both electricity and natural gas.

GRE’s revenue increased to $89.3 million in Q1 2018, from $71.4 million a year ago, on higher prices and volumes sold for both electricity and natural gas.

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