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TXU Parent Reports Highest Residential Texas Customer Count Since 2015

Vistra Retail Earnings Lifted By Texas

Open To Retail Acquisitions, But "Picky"

August 6, 2018

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Copyright 2010-17
Reporting by Paul Ring •

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Vistra Energy, the parent of TXU and Dynegy among other businesses, said that its second quarter adjusted EBITDA exceeded expectations as a result of higher realized prices, lower than forecast operations and maintenance expenses, and strong ERCOT retail performance that was offset by higher power costs than planned for its Ohio retail portfolio.

For its Retail segment, Vistra said that ongoing operations Adjusted EBITDA was $260 million for the second quarter of 2018, up from $219 million a year ago

Vistra said that Retail performance was, "in-line with expectations on elevated volumes and customer counts in ERCOT, offset by higher power costs in the Ohio Retail market"

Increased Retail volumes driven by weather and higher margins, also driven by weather, were additionally cited as driving the Retail performance.

Vistra said that its Retail residential customer count in ERCOT grew 1.1% year-over-year, from 1.476 million as of Q2 2017 to 1.493 million as of Q2 2018, which Vistra said is its highest residential customer count in Texas since 2015

Vistra's Retail residential customer count in ERCOT was also 1.476 million as of Q1 2018.

Vistra's Retail volumes in ERCOT for Q2 2018 were 10,861 GWh (5,212 GWh business, 5,649 GWh residential), up from 9,711 GWh (4,621 GWh business, 5,090 GWh residential) in Q2 2017

Across all markets, Vistra's retail brands serve approximately 2.9 million residential, commercial, and industrial customers across five states

Vistra's total Retail volumes for Q2 2018 were 17,180 GWh (8,905 GWh business, 5,649 GWh residential, 2,626 muni aggregation)

Curt Morgan, Vistra's chief executive officer, said that the company remains focused on organic retail growth, as previously discussed during the first quarter earnings call, as the company has not seen any attractive retail acquisition opportunities

"We've looked at a lot of books, and we just haven't found something that we feel comfortable with," Morgan said of retail acquisitions.

Morgan cited a variety of factors, including valuations and business models that don't fit Vistra, as reasons Vistra has not found any retail acquisitions to execute.

"Maybe you can call us picky, but that's precisely what we are when it comes to buying something in retail, because you've got to make sure it's real," Morgan said

"I don't see it [large retail acquisitions] right now in the near term," Morgan said, though Morgan said that the company could find something in the future as conditions change

Morgan did state that the current volatility does make it easier to buy retail books in ERCOT, and said that Vistra would be interested in buying "selected books" in ERCOT, if there is value. Morgan said that Vistra has the capability to support a larger retail business in ERCOT

Morgan, however, cited the volatility as a good opportunity to grow retail organically in ERCOT, as it has done historically in similar periods, as customers either seek out a more well-known brand, or, if in response to other REPs raising their prices, customers shop around.

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